Back soon! iLetYou Launches, Rental Fundings

Haven’t had too much time to blog here again. With iLetYou launched, I’m laser/super/high/all focused on some pressing priorities. On that note, I blogged about two big fundings by Chegg and HomeAway in just the past 2 days. It’s evident a change is happening.

Back soon!

Product Service Systems: A Sustainable Choice

At the iLetYou blog, I wrote a blog post about Product Service Systems.  Check it out.

Product Service Systems put the emphasis on results, rather than consumption of a product and the inefficiencies and waste caused by pure consumption.  You’ll surely hear more about Product Service Systems, both from myself and elsewhere.

BTW–Software as a Service is a huge example of a Product Service System.  The analogy between SaaS for computing and PSS in general is very strong.  How they both change the world may be equally profound.

Yahoo BOSSes Its Way Into Long Tail of Search

I could have almost missed this: Yahoo has announced Yahoo! Search BOSS (Build your own search service) as also reported by GigaOM and TechCrunch. You can access Yahoo! search results via API or framework, mashing up Yahoo’s index, and ranking and relevance, with your own algorithmic take on search. Not much concrete is being commented, possibly because there’s not much to be said. Om Malik has has reservations, but is interested in seeing what comes of it.

Broadly, it is one of the neater applications of open strategy and web service. For Yahoo, it’s smart indeed just like SearchMonkey was the neat and smart first part of its open strategy.

It is hard, or maybe impossible, to tell what will come of the strategy. It still hinges on someone to create a better secret sauce of smart algorithms, data mining, machine learning, artificial intelligence and all the cornerstones of CS intelligence. And it must be done: it’s a hedge to give Yahoo a better shot at possibly acquiring or partnering with the big bang company that somehow does search better than Google. But all the infrastructure savings doesn’t presume that a better algorithm will emerge.

So I do applaud Yahoo for going down the long tail of search with BOSS. Yet Farecast, Kayak and Sidestep, Oodle, Vast, SimplyHired, NexTag, Shopping.com and many more “vertical search” aggregators ofttimes rich in metadata dominate the fat middle (fat belly?)– and I bet they will continue to do so.

Getting Ahead of the Curve, Lost of Reason

I’ve been busy in the weeds, the real work to make iLetYou as useful to people as possibly can be.  Blog posts have been slow in coming, and this post might even be a little light on substance (although most are).

As of this writing, I’m about 8 months into my San Francisco/Silicon Valley/Bay Area adventure.  I could make hundreds of observations thus far, but I’ll make one stand out: acclimation comes quickly here.

When applied to the hype machine of the Valley, live here for a while and you start to see things the way the collective “we” of the patch stretching from approximately San Jose to San Francisco (maybe partially into Marin County) sees things…  And I think most people actually believe that is a positive.  I tend to agree.

This is a land of forward thinkers, borne of reason and deep contemplation (there’s the Ivy influence for you).  I always fancied myself a forward thinker, but this is where forward thinking is pushed to boundaries.  That boundary where most reasonable people would label people a “nut job”.

Steve Wozniak was a nut job.  Bruce Sterling can seem like a nut job.  On and on.

And it’s in the fabric here.  Everyone who’s anyone has an idea, everyone’s an innovator of some sort small or not.

An aside about Twitter: I have not yet set up a Twitter account.  To balance the sides out, I can see how a lot of people don’t get Twitter.   I can see how it’s enjoyable as is updating your Facebook status, but I really can’t understand it myself because I’m not addicted to it.  There’s just so much going on, that sometimes I choose to filter noise to the better cause of focus.  Lots of people here choose to always be the prototypical early adopter – some wisely, some not I would think.  For me, sometimes you can’t always allow yourself to hear the noise – it’s much better to concentrate on the signal.

So now when people ask about Facebook apps, social networking monetization, online video monetization, Twittering, Office versus Google apps, altruistic and open source projects, cloud computing, software as a service, I just tell people that it’s just a matter of time.  In these easy cases, the signal is loud and clear.

To do something interesting and to have the best chance of success, you have to get ahead of the curve.  This is especially the case in technology.  Like I said, I think I possess the ability to see ahead but it’s a process that I’m glad my peers in the area embrace likewise.  And, yes, you do have to be right.  And you do have to be in a position to take advantage of trends.

Sometimes you get trampled.  But it’s necessary to lose that sensibility that every naysayer espouses.  That loss of sensibility is what drives the area, what makes me really embrace all that the Valley is about.

Are you funded?

I’m making my way around some Web 2.0 Expo events this week. Last night, I went to a smaller mixer but that had some very interesting people running around. It’s an inverse proportion much of the time.

David Hansson at 37Signals writes, Are you sure you want to be in San Francisco? He also gives one of the more tremendous talks that balks at the raise lots of money, ride the big way, and sell out mentality that motivates many in Silicon Valley.

One piece of unsolicited advice when emerging yourself in the tech scene: don’t ask startup people whether they are funded so early on in a conversation. I do understand that funding quickly asserts a level of validation. However, I find it a major turnoff.

Not only that, but most interested people probe about ideas. Most VCs I’ve spoken to acknowledge and respect an entrepreneur whose answer is “not yet, but when we’re ready, I’d love to talk.”

Go one step beyond, and if funding or press attention (another supposed source of creditability) were your main criteria, you’re going to miss the diamonds in the rough. Look at ideas, look at the people by all means, but use your head in judging. So while I mostly argue for the merits of the Valley and balk a little when the “raising money is bad” rhetoric goes too far, it’s not greed and ambition, it’s the free flow of ideas that really moves SF and the Valley.

Maybe I’m ranting because we’re privately funded and bootstrapped, and the follow up to that answer “Oh, well that’s a better way of doing things” seems like a fake answer. And maybe down the road I’d swagger and say “yes, so and so funded us.”

But I don’t think so. My answer would be a vague “yes” and I’d move along to someone more interested in the merits of ideas rather than relying on external validation.

April Fools & the “Is this a joke?” Spectrum

One of the funniest byproducts of April Fools jokes and the tech startup, blogger community is discerning whether something is a joke. This year’s breed of jokes seem to be somewhat unoriginal, stuff you’d expect from the tech community with its own sense of humor.

So a funnier question is: if you’re a Web 2.0 startup, could your startup be an April Fools joke?

There’s a spectrum of joke businesses. A surface scan says you want to be something like eBay. Auctioning your stuff to strangers was a weird idea. You don’t want to be like Pets.com though, weighing your future on freighting pet food around the country for cheap.

I encounter this in reactions to rental businesses I mention in reference to interesting stuff that can be rented. Fake wedding cakes, baby toys, jewelry for rent: these elicit different levels of skepticism and downright laughter from people.

If you’re not doing something that at least someone laughs at, it’s probably not original enough to go very far. There’s actually no shortage of these businesses in Web 2.0: many of which will fail because it takes much more than a silly idea. But that seemingly silly idea is far better than something so unoriginal that it elicits no strong response whatsoever.

You’ve got one shot! Not!

Three common Silicon Valley entrepreneur viewpoints:

Viewpoint #1: You’re young. The downside is low, typically 1-2 years in forgone salary and just your time if you’re moonlighting. You get great experience that can even enhance your resume of consulting, McKinsey, investment banking, finance, and business school with “in the trenches” experience.

[I owe it to myself to try, but corporate life is my backup especially once I get a family and other obligations.]

Viewpoint #2: I’m in love with working for myself. I’ll do whatever it takes to work in my pajamas: freelance gigs, affiliate marketing, Facebook apps, blogging. I understand that compensation may be lower, but lifestyle and freedom are worth quite a bit.

[I’m in love with this lifestyle. Sure I want to make it big, but I’d be happy even if I didn’t.]

Viewpoint #3: I’m learning and growing along the way. I may jump between gigs at startups to learn the ropes from people who’ve done it successfully before, banking/finance/VC jobs to get exposure to big transactions and connections, and doing my own startups.

[I want to learn this process and master everything about it. Entrepreneurship is romanticized. There’s nothing inherently different between your own startup and someone else’s. All that matters is success.]

I’m simplifying the picture, but you’d be surprised how many people fit into these broad strokes.

You’ve got to have the skills to posit reasonable hypotheses. But you also have to realize that rarely is one shot enough. Give yourself enough chances to fail to get to success. Look at the every process scientifically: one failed direction means you’re closer to the correct direction. One failed marketing campaign means one campaign closer to the right.

Test, measure, adjust. Test, measure, adjust. Ian Ayres writes about this extensively in Super Crunchers. The most effective methods will combine informed hypotheses and intuition (the universe is too big to test everything) with systematic testing and measurement.

Speed means a lot because you get a lot more cycles in (1 to 2 years may be one shot for some, ten to twenty for others!). You’ve got one shot… not!

(I don’t always take this advice, but I resolve to always try to.)

Web 2.0: Dynamics Are Still Misunderstood

Just read an interesting article in early 2007 about Web 2.0 – Great Investments Required. So much good stuff out there. He follows up the conversation with Changing Ingredients for Web 2.0 Success.

It’s a relatively rehashed argument, so I’ll try not to reiterate each and every salient point. Costs of startups driven down, but clutter means differentiation is increasingly difficult. And there are many good points that are still relevant today. A slow burn, slow grow is also OK. At the same time, you might need to raise money to blow out of the fog of Web 2.0 startups. Mr. Evslin is still very correct in these points.

What’s changed in the past year? You most recently  these dynamics at play in the Facebook App hype, which is slowly starting to die down.

1. If you’re not taking off and A) you’re not extraordinarily well-funded B) you’re not extraordinarily well-connected or C) you don’t have a strategy to steady growth, then you’re probably too late.
2. There’s also a general backlash against the “A List” media outlets (blogs, press). It’s another rehashed point. Everyone points to the PR spike, then a fast drop off to almost no traffic. You see fewer and fewer stories hitting the trajectory, and this is likely the reason for the backlash. There are fewer and fewer opportunities that are unsatisfactorily met. It was already risky. With the increased noise and everyone vying for the top outlets’ attention, it’s now incredibly risky and possibly dumb, instead of taking a more fundamental strategy.
3. There’s mention from Stowe Boyd to enter the “white space” of unmet needs rather than being a “me too”. Devastatingly obvious, but seemingly ignored today.
4. Timing is everything. In broad strokes, there is no hard-and-fast rule for a lot of this stuff. It’s a chess game with so many different permutations that every situation is different. Just about the only strategy that is most fully destined to fail is the one that simply sits still.

What is this about? What happened to faith?

Because market conditions drive decision making, constantly re-evaluating choices made. Entrepreneurship is never about blind faith – it’s about educated choices, calculated risk. A bubble also means a lot of people will get burned if some of these points don’t get understood quick.

It’s NOT Freedom of Information, It’s Protection of Information

It’s pretty rare that I wholeheartedly agree with, or even care about, one side of a disconnected tech argument. This time I do.

If you haven’t followed it, today the argument is over Robert Scoble’s account suspension from Facebook for participating in a Plaxo test product that scrapes user information from Facebook.

Kara Swisher seems to agree that Robert Scoble is fighting for freedom and portability of information. I flatly disagree. Scoble also freely admits that he broke the Terms of Service.

Instead, I agree wholeheartedly with Michael Arrington and Loren Feldman (his video is quite good). Scoble wants to free YOUR information. Where there could be some disagreement is that I don’t necessarily think that Scoble has malicious intent. Gathering your rolodex to plan your next career/business move is not malicious. So if his account gets reinstated, I wouldn’t really care.

But go one step further and the entire system breaks down. Facebook then no longer has the potential of being a trustable silo of private and public information. No one will ever post their cell phone or primary e-mail addresses. Or remotely sensitive personal information.  Once that contract breaks down, then Facebook falls far from that $15 billion valuation.  You can’t make exceptions. That’s the reason why rules and terms exist. Plain and simple.

Facebook really got it right this time. There may be some business motivation, but they still got it right.  And that’s all that matters.

Facebook Apps and More, Valley Favoritism?

It’s been an interesting day contemplating and observing the choices and politics that go into the ultra-competitive startup world these days.

Valleywag publishes an eye-opening letter from a Facebook Platform Developer documenting subtle changes that are slowly removing the “multi-million users in days” hype surrounding F8. In effect, early applications on the Facebook Platform got the benefit of viral effects of unlimited viral distribution and placement. Recent developments have limited the number of friend invites to 10 per day, plus allowing for opt-out of placements within a user’s profile and news feed.

The hype surrounding the Facebook platform reeked from the beginning. This is with fully disclosing that I saw Facebook’s platform strategy as unequivocally brilliant the moment I heard about it. Steering of the company like this will eventually lead to Facebook to the stratosphere of the $10 billion+ club.

The “Facebook as the next Internet” was a juicy story for the Valley and Tech. Many correctly state that Facebook had the right to re-enforce the hype for its game-changing initiative by inflating and encouraging these huge application user numbers. Where the Facebook developer takes issue is the lack of an even playing field or transparency would-be developers are receiving.

It’s pretty much well understood that the first movers on the Facebook platform would get a disproportionate amount of the attention. It now seems that the drop off is steeper than first realized.

In this case, I understand the frustrations. When all you ask for is a level playing field, I don’t think that’s too much to ask for.

Unfortunately, this is a case of where you need to understand what you’re getting yourself into. Facebook is not a walled garden, in fact it tries to position itself as exactly the opposite. However, it is a Facebook-controlled environment. No matter how forward looking Facebook is compared with MySpace, it has to be understood that placing all your bets on a system controlled by another entity with different interests than your own carries its own risks. Hopefully, we can all go back to understanding that Facebook will just be among the development choices one has – it’s really up to Facebook as to where the choice ranks among the hierarchy of different choices a developer has these days.

Was favoritism at play? Yes, certain applications got head starts that seemed a little unfair. However, if you jumped at the right time with the right application, you could have been in the million-plus user club regardless of who you are.

Meanwhile, over at TechCrunch here and here, a swapping site called Swaptree is getting a disproportionate amount of link love and some TC readers and swapping startups are pissed off. Many accused Michael Arrington of taking money for the post. More believe that dedicating two links to declare the re-emergence of Swaptree to be a waste of space particularly in a subscription-based RSS reader.

I take issue with certain elements of swap/barter compared to the liquidity of commerce (buy/sell) and rental (borrow/lend) things. Commerce is clearly the driver of our economy. Barter is largely a less sophisticated version of commerce. Rental is something most of us regular folk do on a regular basis as well. It fills an entirely different need of experiencing any item from DVDs to clothing to cars to homes that you can’t or don’t want to own outright.

Swaptree has managed to integrate a new twist with multi-way trades so I don’t agree the posts are fully without merit. You can read the comments here that I participated in if you’re interested.

If you’re going to call wolf, you’d better come up with the goods. It’s all you can control is the sentimental answer. More than that, the world is simply different than ever. Startups built to get “Crunched” are destined to fail. Those that get “Crunched” as a result of being something truly useful deserve to be there, so they would’ve succeeded anyway.

In coverage and in life, you can’t get it right every time and by trying to be right all the time, you are destined to miss a lot of good stuff. More than ever, the world is a democratic place and the good stuff eventually bubbles up.

Furthermore, I do not believe that either of these entities, Facebook or TechCrunch, have anything but the best intentions for the tech community at large.

So no matter the challenges and politics, times are good for Internet entrepreneurs these days.