Top 10 Ideas from Web 2.0 Summit

My top 10 ideas or reflections from Web 2.0 conference this week in San Francisco.
#1 There’s a real Heirarchy in Value Creation
Apps beat features. Online applications beat packaged applications. “Open” applications beat online applications (meaning those you can build on or get your data out of). Platforms beat any application. Customer experience beats platform. Ultimately the customer experience and not the feature set will define success.
As an illustration, has found a way to become a real player again. I used to think AppExchange was a cute little idea and after hearing about Marc’s “elastic database” I see I was wrong. This thing is pure enablement for many players. It is similar to Ebay or Amazon in that this is clearly a platform play. has unbelievable data and a fairly inexpensive, flexible platform for people to develop away. Easy APIs for people to design neat applications around the AppExchange platform. Because of them, you have a database service. You no longer need oracle or SAP, and can use services on the network to enable great data management.
#2: Competitive Play = customer focused
Focus on doing good constructive things, and looking for ways to protect and enhance the consumer is the google objective. Do the customer right. We [google] don’t worry about getting big, but we do worry about taking our eye off the ball. Those industries that withhold information, withhold customer choice, those die. – Eric Schmidt Google
#3: Make your Organizational Design about Small
Small teams win. Craigslist with 18 people was in the top 10 Internet Companies. Google focuses on small teams to enable creativity. With Web 2.0, efficiencies are about small, creative, productive teams with focus who then know how to leverage one another and then leverage from the community to build on what they create.
#4: Managing Information central to Next Innovation Cycle
The key to the next evolution is managing information. It’s not about whether writely or spreadsheet apps replace Microsoft office. It is about how we consume, share, and manage information. Our information is the critical element. And yet we harbor it in little devices, hard drives, and locations. Omnidrive was on the launchpad list and the only one I thought would serve a new need.
#5: Coolness and Mockery will happen.
“There will always be people who think you are a jackass” was the comment by those that bought Myspace. But the key to any acquisition or strategy move is to execute your plan and “see who the jackass really is in the end”. There was a great deal of criticism when $580 million was spent for MySpace, and now Rupert is a genius in the wake of Google’s validation of the space. There will always be naysayers, even on your own team. Listen and then change what you need to, and create. Creators are unusual but naysayers exist everywhere.
#6: Choose Speed with steady improvement, over long development optimization
Googlers respond and use more when the search query is faster. The upload on Google Video was 24-48 hours, and YouTube was instantaneous. Who won? YouTube. Fast and nimble wins the race. Make up in volume what you need to do with customers but let them have immediate access, fast interactions and they’ll forgive another click to get more information. To me this is the idea of incremental improvements. Keep going in the direction you need to go, and you’ll get there, but if you wait till it is “perfect”, you’ll be passed up.
#7. Create opportunity for many to join you in solution creation.
Goldcorp had geological data and created “the goldcorp challenge: Paid anyone to find gold on the property. The contest allowed them to find $3.4B in gold for a nominal cost. This proves the point that as long as you have a problem that could benefit from many minds and talents, you can be open — the many can be smarter than the few.
#8. What looks cool today maybe old school soon.
I’m not sure anyone remembers this really but there was a time when Compuserve, AOL were the cool kids. Before that, we didn’t have an email system. There were comments at this week’s Web 2.0 conference that Facebook, My space, etc is the same. And to some degree I buy it. What creates a category isn’t necessarily who develops, and grows a category. That’s why Ning (Marc Andreesson’s new company) is definitely an iteration off of myspace. Where myspace has the same standard profile for everyone, and a lack of ability to limit who sees the social network, Ning is customizable in several ways and will allow those that care about privacy and brand to manage their own networks. The point is that where YouTube and MySpace disrupted media, Ning is going to disrupt them. It’s called innovation. John Battelle made the observation on the second day that several of the folks were saying how they were going to compete with Google, because Google is effectively the “Model T of Search”. It was a great line and indicative of how fast and sharp John is.
Remember this: incumbents have a different set of risks once they’ve established a category. They have to be “backwards compatible and get customers to move with them. That’s different than the newcomer who only has to offer something incrementally better. Doesn’t mean innovation doesn’t happen, it just requires a different set of ideas and sorts.
#9. Entrepreneurs take risks and focus on REAL value.
Bob Parsons runs Well known partly because of his radical television commercials. Because one was pulled from the Superbowl, got more traffic than if it had played. This is a guy that says he “sort of failed 5th grade”. Backed out of going public after filing the papers and getting close. “I didn’t see much evidence that there was thinking beyond short term paper profits.” He had 900/1300 of his people in customer service. and he was getting pressure to lower those costs. And what he realized is that when he was ready to close up the business, he would cut those costs.
He won my heart by saying: “Operating cash flow more important than paper profits”. Entirely self-funded and earns $1M cash/ week.
#10. For all these entrepreneurs, focus on real money, not the paper money.
I could see the drool and froth from the entrepreneurs when they sat next to VC folks. But Ram Shriram, one of the earliest investors in Google, said “I’d rather see start-ups scrappy and frugal and on a diet of Ramen noodles.” According to him, one is not going to get YouTube kind of exits always. So it’s important to be frugal from the beginning.
Hooray for a voice of sanity.
Bonus round:
#11: Advertising.
Advertising, like all marketing should not boring. If you aren’t alienting some %, then you are going to get lost in the noise. Bob Parsons said, and I agree, that when it comes to promoting, be different. Stand out, and take a risk.
#12: Those that are top of the heap have much lower marketing costs.
Ray Ozzie: “Unlike Google, I don’t have to acquire products or users.”

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