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Archive for the 'Business Models' Category

Like a jigsaw puzzle in progress

How do you visualise the process of starting and running a business? I thought of this imagery while thinking about what I’m doing and how I can move forward.

Take a step back, look at the roads you took and the things you did. Compare with the visualization I am going to describe.

The imagery is that of building a jigsaw puzzle.

How do you build your puzzle? I can think of 2 ways

  1. Start from a familiar piece and build around it until the whole picture is complete.
  2. Put many separate pieces in place and try to build each island until they join together to form the whole picture.

complete-from-one-pieceIn the first way, the entrepreneur starts with a core idea. This could be something he/she knows, has experience or an idea. It is like picking up the first piece of the puzzle.

Next he starts looking for pieces that fits and put them together, joining to the starting piece. In business, we start putting together pieces like looking for partners, suppliers, distributors, customers, staffs, office, paperwork.

Slowly but surely the picture becomes more complete just as the picture of a company becomes clearer and clearer as more pieces come together.

I’m not sure if this is typical to many entrepreneurs because this is not what I do, I’m more like the second way.

complete-from-many-islandsWith the second way of putting together a jigsaw puzzle, we start by putting together a few isolated “island” of pieces.

In the case of business, it is like doing a few things at the same time. Some gurus would caution against this as being too stretched. But I think many entrepreneurs try out a few things. Not all the things work especially well but do the few things together enable them to bring in enough income.

Over time the “islands” grow. Some are larger, some smaller but all are viable. At this point the entrepreneur may start to think “How do I link all these islands together?”

For a jigsaw puzzle, linking is a matter of finding the pieces that join the islands together. For a business it could mean packaging the different services or products. If the entrepreneur is using different identities for each service/product, a holding company or a group identity may be useful.

In my case, I’m at such a crossroad. I had been doing a few things and each of them had been successful to a certain degree. Now I’m thinking about how I can link them or cross-market them.

Of course imagery is never a perfect reflection of reality but an interesting way of looking at things. It is the same here, the two methods certainly do not exactly dissect entrepreneurs into 2 groups but represent different approaches.

Further intesting thoughts:

  • Things evolve and the 2nd way could evolve into the first as islands are joined.
  • We can imagine the final picture as a vision and build of the puzzle as steps towards the vision.
  • In the real world, the puzzle has no boundary so in theory you could build on and on.
  • Imagine a puzzle where the picture changes over time, so if you do not find the right pieces fast enough, you may find what you had done become invalid.

I have not come across this analogy anywhere. If you know any author that mention it before, let me know.

Ebay is out of China

Came across this article that eBay is getting out of China. The report indicate that eBay is planning to sell the eBay and PayPal business in China to Tom.com.

Those following online business in China may recall that eBay brought Eachnet about 2 years ago making the founder (forgotten his name) one of the riches guy in China.

Yahoo also sold their operation to Alibaba last year. And Alibaba again is behind the site Taobao which is eating eBay’s pie in China.

Reading the comment that follows the article, I have to agree that eBay do not know how the fine art of doing business in China.

Also mentioned, the undercurrent of protectionism is very real. Certain policies are unwritten but through execution can legally create barriers. In the offline arena, Walmart is also feeling similar heat.

It is worth noting that there are incentives to grow local (ie Chinese) business that can compete with their foreign, especially US, counterpart.

For the intrepid entrepreneur, it means there are still plenty to do in China.

Learn to stop worrying about details

Many pundits claimed that without a business plan, you are planning to fail. Yet others ignored business plan. Those walking down the middle avocate a short plan.

Over the years I had learnt to stop worrying about details but to let the details work their way out.

It is not to say planning isn’t important, it is. It is about not getting bogged down by details, unknowns, over planning. All these can actually lead to inactivity. Oftentime things will work the details out itself but only if you get it started in the first place.

Take the recent example of our new office. We had wanted to have a bigger office because the current one is pretty cramp and we would also like to have a meeting room. At the same time it is an option to expand, we had moved offices many time as a result of space and it would be nice to preempt that.

Well, chance has it that the floor above us became available and presented itself to us. We went wildly excited but at the same time went through our accounts and worried about the sustainability. There were many unknowns and we started discussing many “what-if” scenarios figured our current cash can only sustain another 2 months.

It is a good thing that the property is hot and we had to act fast. There isn’t enough time for us to figure out every possible scenarios. So we decided to go ahead and rent it.

The deposit was paid on Friday. Making that decision had actually led us to focus on how to make it happen instead of worrying about why it would not happen.

We are talking to a few entrepreneurs that are interested to share the office with us and use the meeting room facilities (In fact we now have plenty of space because we decided to keep the existing office as well). We are also planning ahead when the office is ready so that we can expand and grow our business.

All these activities would not happen if we just stood there and worry.

Revenue Lost from Piracy Overrated?

Arn’t you tired of such headlines already?

China piracy costs film industry $2.7 bln in 2005

You could easily change “film” to “software” or anything that the Chinese copies - furniture, apparel, shoes, bags…

Without revealing how the figures are arrived at, one can only read such report as propaganda at best.

Sure, I brought bootleg videos along the road. Did the original company lost revenue? Not in my case. I never would buy the real thing anyway. What then is the number of people who would have buy the real thing but ended up buying the pirated version? Between 0 and $2.7b?

To state plainly, I am not for piracy. On the other hand, I’m not for lamenting priacy lost as well.

It has been presented and argued that the solution is on another dimension, a paradigm shift, a different business model.

The same thing with software.

But then, China is not ready yet. It will not for the next 5 years at least.

Choices: Continue lamenting or craveout a piece of the future pie?

From 0 to independence

A while ago I hinted at my new year plan. Well here it is.

From 0 to independence is a project but also an exercise to achieve financial independence from online revenue. My plan is to systematically launch, run, test and share different ideas. In the end ,the aim is to have a model that achieve consistent online revenue. I believe this to be highly possible but not without some hard work.

Join me on this journey in 2006.

Now Squidoo …

Accidentally stumple upon Squidoo today. I love the brilliant ideas on the internet. Web 2.0 ideas keep mushrooming. No wonder we are on the verge of another internet boom (or bubble depending on how you look at it).

Ning was cool for the PHP programmers, maybe someone techy inclined. But Squidoo, it’s for everyone! In minutes I setup a site. Not only that, the philosophy is great too.

A Co-Op. Exactly a model I had in mind for sharing the fruits of labour and doing philanthropy at the same time. An idea the captures not only interest but also the heart. Where the heart goes, the action follows.

Created by Seth Godin, the same guy that introduced Purple Cow and The Bootstrapper’s Bible. You can be sure it’s creative and virial.

Catching up on Open Source

Spent most of this morning catching up with Open Source developments. More money are obviously being poured into Open Source. News.com has an article on this more than a month ago. Commented time and again, open source is still searching for business model.

Coming up with an open source application is getting more difficult in each and every application category. Most major categories already has one or two "category killer app": operating system - Linux, BSD variants; webserver - Apache; web browser - Firefox; database - mySQL, postgreSQL; office suite - Open Office; the list goes on.

Notice that non of these "killers" are company (with exception of mySQL). Apache, Open Office, Mozilla operates under some form of foundation. Mozilla had went commercial though. Most of these "killer" projects are supported by mammoths like IBM, HP, Sun, even Google, contributing resources into fundamental development which greatly benefits their other commercial activities at the higher end.

Foundational opensource projects such as these will keep on improving and the foundation thicken.

In thinking about it I came up with the Open Source Maturity Model. This model can applies to a single open source project or the whole open source macrocosm.

Foundational

This is what had been built, providing a firm ground for growth. Thus Linux provides the operating system, Apache provides the webserver function.

Works are done here to consolidate and stablize functions, improve usability.

As the Foundational frontial pushes forward, developing functions became stable and people/company/government start jumping on to use Open Source.

Many ad-hoc personal or even corporate participation occurs in this level. The motivation is generally not to create a business model out of it. It can be viewed as patching leaks here and there in the foundation.

While venture capital may not be interested here, enterprising companies could start a thriving business supporting other businesses that are getting getting on.

Cutting edge

This is where much of the buzz, expectations, hopes and hypes are generated. It represent some form of the "future".

For many companies and individual, this is exciting and represents opportunity to direct the future. For those waiting to jump on to open source, it represents uncertainties. A lot of technologies that were expected to be killer, fizzled out.

Most of the time the cutting-edge is dominated by big corporates or academic research.

Transitional

This is the "now" in open source maturity. Things are happening but the dust has not settled - like "Will the OpenDocument standard be widely accepted?", "Will Ruby on Rails trump PHP and Java?"
Many big corporations support work in this transitional stage for a number of reasons.

  1. It could potential direct development in their favour.
  2. It link up the foundational functions to high-value services near the cutting-edge.
  3. Entity looking to get on to Open Source are taking cue from what the "technology leaders" are doing.

Venture capital typically invest in companies near the frontier of this stage. Projects or services that are gaining momentum or going to fill anticipated needs.

The transitional frontial is ever moving forward. This means that invested companies probably had started at or nearer to the cutting-edge. To win, it is important here to consoldidate and become foundational, be the only one or two left standing when the dust settles.

What do I see from this?

  1. Major categories had all but disappeared.
  2. Most ideas will tend towards the niche.
  3. As an open source category matures, the emerging winner will take majority of the share.

My plan for 2006

Today a brilliant idea struck me and got me working on it immediate. Rarely in recent times had I have such impluse.

If ideas are a dime a dozen, then what I thought of may well worth 30 cents (3 dimes). It wasn’t anything new though, just a repackage of what I had been doing, putting a formal framework and marketing slant to it.

What it is? I will keep the suspense until 1st of Jan 2006. *wink*

The power of iPod users

Let me quote this exchange among a group of iPod fan(atics) among my friends.

A: …S, Da, R I bought IPOD NANO!!. Haven’t name it yet. Any ideas? …

Do: … welcome to the Fellowship of the Pods… well, can name it "Aunt A"

Da: Welcome to the iPod family! Of course, you have to go through the iPod initiation rites. First, you GOT TO christen your Nano. How about "Axxx" or "Cxxx-eey"? Then, you got to clock up at least 50 hours of listening time within the 1st week. After that, you are a bona fide iPod-er.

C: Not fair! I protest~~~!! I feel real excluded without iPod!!

As you can see S, Da, R, Do and A (and a few more) are iPod users. C and myself (and a dwindling others) are not. When we get together, conversation will somehow turned to the little white cool gadget and another soon become a convert.

Mind you, when the iPoders introduce the iPod, they did it with passion and hardsell. "You got to get one!" "It totally changed my life!" "I will go with you to buy one!"

Another iPod sold.

Some company pays handsome for salesperson. Apple get it all for free!

How? Another case for marketing textbook no less.

Domainer

Few of my friends had quietly became domainer. What is a domainer?

Domainer is someone who buys and sells domain names.

According to Business2.0, this is the online version of real estate. Just like people invest or speculate in real estates, domainers invest or speculate virtual estates - domain names.

The latest (not really new but getting more attention) thing for domainers is international language domains as well as country level domains like 中文.com or domainname.cn.

With low investment and potential high returns, it had gotten many people excited.

Although I had been registering domains since 1995. I had never seriously consider being a domainer. Of course I had kicked myself for letting go of a number of good names over the years.

As a result of this recent craze, I’m taking a look at it more closely but it really has all the ingredients of a tulip fever. Will there be a bigger fool to buy those names from you?