Great advice for web startups

Pieter Peach sent me this email yesterday. He’s just a great bloke who thinks about others. In doing so he shared some valuable insights he took from a web 2.0 conference. It was such a succinct and insightful email that I thought I’d share it here verbatim. Enjoy & digest. Steve Sammartino

Just came across an email I sent to myself from a session in W2.0NY last year.  Straightforward stuff, but a good reminder for me, thought I’d pass it along.

“Sitting here listening to a great speaker on developing next gen web 2.0 apps, will email stuff as I I hear it.

Just quickly

Requisites for successful 2.0 service
1.    Network effect
2.    Collective intelligence
3.    Lightweight business models
4.    Longtail (maybe)
5.    Encourage unintended uses
6.    Platform vs application
7.    End of the software release cycle
8.    Rich user experiences
9.    Innovation in assembly

Race to dominate remaining data classes.
Its hard to compete with those who have a head start in developing the network effect in a particular data class. “



Magnation – great battle story

Last night Sahil Merchant the founder and CEO of Magnation (uber terrific magazine retailer) gave an inspiring talk at the Hive.

It was great to hear a great battle story, and not some story by an egoistical rich guy. A real battle story. His honesty was brilliant, and everyone loved it. Rather than re-tell it – I’ve used the power of twitter and and captured all the tweets with #hivemelb from last night which occurred while he was speaking in real time. It’s very interesting to see what caught peoples attention.

Read bottom up to see the tweets in order of occurance.







twitter-follow-me2 Steve Sammartino

The strategy is fine

Today I had a discussion with a fellow entrepreneur who was wondering whether to reduce his pricing on a new business. His point was related to the fact that his very new business hadn’t achieved a great deal of sales volume just yet.

Then I asked him if he had implemented any of the sales generating activities we had discussed last week – to which the answer was no. My response was straight and simple:

If you haven’t been out knocking on doors selling your product to the potential target market, then how is it possible to know if the marketing mix is wrong?

It was at that time he knew he had some boot strapping work to do and get out there and sell.


The point for entrepreneurs is that it is easy to get tempted to constantly revisit the strategy. To go back to the plans when things are not automatically falling into place. Instead of doing the really hard stuff – we look for a simple revision of ideas, the plan and all that shiny stuff. The thing we often avoid is the hard effort of selling and facing rejection. But until we go out into the market and try to generate revenue, it’s impossible to have real market feedback of what needs revised.

So before we re-design our plans and process, we have to test the current one in market. We do this by trying to sell what we already have at every possible distribution point. Until we have done that, strategy revision is just an excuse for not putting in the effort required.


the instant reward society

I was recently asked how  a particular rentoid promotional activity went. Which was when we got rentoid on

Turns out it was pretty cool, he did a good job of promoting our stuff, but there wasn’t a huge upswing in members or rentals. Which is OK – it wasn’t a game winning activity. It got me thinking about our attitudes towards instant gratification. We live in a world where we want and expect instant gratification. In nearly all things. It’s not hard to understand why with Google results, instant video, mobile technology that we want our answer right now, or we’ll move on.

This has a dangerous implication for entrepreneurs – in that the business world doesn’t work this way. Sure we need to move quick, finish things fast, and innovate constantly – but this still wont (or very rarely) will deliver instant results. We need ignore all the stories we read about our heroes who ‘did’ have things work out rather quick. They are the 1 in 6 billion aberration – and believe me it is not us – we are not that lucky. And it is luck, not brilliance. Proof of this lies in the fact we all know a handful of equally brilliant people who haven’t had the luck of Zuckerberg or Sergy.

We need need instead is to stay the course, and have faith in our actions. We must celebrate effort rather than results. Because there is no telling when the results will actually appear. But if we do the right things they will come to fruition. Success which may not be the global type entrepreneurs like dreaming about – but success to a level of great satisfaction.

We again can look to nature to see this in action. If we took societies instant gratification ethos into growing our food we’d all starve to death. In nature things take many months at a minimum, many years as the usual, and oft times, many years before we will yield anything. Whether we are growing vegetables, crops or fruit, we have to believe that doing the right thing will result in in just rewards. But we will not see the rewards until a long time after the input of our efforts. Efforts which must be made consistently every day with nothing to show for it. We must have faith that that the results will eventually come. Without faith the motivation to continue the nurturing will be lost. We wont do what is needed and the crop will fail. There is no instant reward in nature.


And there is rarely an instant reward in business. We need the same faith we have in nature when we know we have the right ingredients. We must continue to attend to the field regardless of physical evidence of success. We must celebrate effort and not results. Only then will we have the patience and tenacity required for a financial yield.


Set up costs

When starting out in business the first thing we often do is set up the relevant legal structures:

  • Partnership agreement
  • Logo design
  • Business name registration
  • Operating company
  • Holding company
  • Non disclosure agreement
  • Holding company trust
  • Member terms & conditions of product / web usage
  • Specific bank account
  • Small business book keeping software
  • insert other legalese business recommendation here

Startup blog advice is this: Don’t waste your time or money. Get revenue first, register later.

With the only possible exception being a .com registration – which if you’re in the on line world may be an actual requirement to simply operate. No doubt this is contrary to all you’ve read in business guides. Sure, keep accurate cash flow books, run things professionally and stick to project deadlines. The reason for the recommendation is pretty simple. Most startups never get to revenue. If you’re like me you have a hard drive full of business ideas, half written business plans, and a spare room full of product prototypes. Until we have revenue (which doesn’t mean a couple of orders, it means thousands of dollars) we have nothing to protect. It also adds a strong reporting and administration burden which startups could well do without.


So why waste time and money building a fence around nothing? Build the castle first, or at least get the foundations in place. If we follow the lawyers advice, they may be the only people who ever make money from the venture.


The urgent & the important

Lately I’ve been overly focused on urgent things. Urgent agenda items, like fixing bugs, invoicing and administration. They’re kind of like fires, so we must attend to them or things could quickly get out of control. The problem with urgent tasks is that they never go away, they re-appear day after day, and stop us from working on the real projects which will generate value for our users, members customers. In fact, when we are working on the urgent, we are ignoring the important.


So what we must do is set up systems and infrustructure which deal with the urgent, systems which remove us from the path of the urgent, only then we can focus on delivering value which will result in real startup objectives being met. So today we should stop for a moment and look at our task list.  If it seems dominated by the urgent, we shoud re-callibrate it to focus on the important, which may invovle setting up the systems needed to stop the folly.


Why speed wins

In start up land the most important thing we can do is do things fast. It’s the opposite of the perfectionism we learn in graduate school and large corporations especially as it pertains to marketing.

Here’s why:

So the startup blog explanation of my above chart goes something like this:

No project, task or strategy is ever perfect. Even if we spend a large amount of time developing it. At best it will be around 90% of what we need or imagine. If we cut the available amount of time in half (which is this example is 6 weeks) we may be able to achieve 70% of the desired outcome. But what option 2 presents for us is the ability to learn and revise quickly. In fact we can launch another version (version 2.0) of said project for another 70% progression.

The net result is pretty simple – we’ll be a progression of 140 vs 90. Pretty simple. And in startup land the reality is we often don’t know how effective something will be until it is implemented, and from here the lessons will emerge. In addition it moves us up the learning curve and in all probability the next implementation will be far more effective than the first.

The other fact we have to consider is that speed is important for our customers. They like to see progression, even if it is less than perfect. They know things are improving and that we are making stuff better for them. It’s also far less confusing to deal with incremental consistent change than it is a total re-design. We also remove the risk of better ideas and methods putting a kibosh on doing anything at all and creating inertia.

And this is why in startup land, speed wins.