eCommerce Means Real Business Models on the Internet

eCommerce is growing like hell in any developed Country and in almost any developing Contry. That’s good news for anyone in the eCommerce or related industries, but also for anyone trying to launch or make grow a internet business, because eCommerce means real transactions, and a real business model with a lot of branches (new and future business models).

Until nowadays, it was really hard for a lot of startups (content or services) to develop a robust and scalable business model, because you had two main options: charge your users for accessing your service or adopting an advertising based business model. As Internet users are used to access contents and services for free, it’s really hard to be able to charge them for accessing our contents or services, and that’s why a lot of startups have adopted a freemium model where you give access to a reduced or limited version of your service for free and then charge your pro users for an unlimited access. But when analyzing the statistics of freemium based startups, you notice that the freemium model doesn’t works for a lot of startups, so it may not work for your startup and will require you have a lot of money to support a fast growth of users that doesn’t make to increase your revenues. In certain domains, specially if we focus on mobile games, variations of the freemium model (in-app payments, digital goods, etc.) are working great for a lot of startups, but for most web based startups the freemium business model has demonstrated to be a real failure.

Advertisement is an unsustainable business model for the majority of internet companies. The reality behind this business model is that only a few big companies are making big money with this business model. You only have to talk to several publishers to notice that if you base your business model in advertisement, you’ll find yourself trapped with no way out.

In the “real world”, there exist plenty of business models, but every business model is based on the idea that in some point there exist a real economic transaction. eCommerce is bringing real transactions to the Internet, so now the online channel has the same strong basis that makes possible to develop successful business models. And you could say that internet business models in the end generated transactions in the real world, and that could be true (but not always), but the fact is that since eCommerce has started to shine, a lot of business models have emerged or have consolidated: ecommerce (direct transactions), subscription models, affiliation, group buying, etc. And in the last months, I’ve seen a lot of startups developing pretty interesting projects around eCommerce, but with new and interesting business models, that are based on the existence of eCommerce.

Nothing has changed, but everything have changed. eCommerce is bringing stability and sustainability to the Internet, and for the first time we can be sure that we have a strong foundation where to build our internet businesses.

DIY.org: Gamification for Makers

Recently I discovered DIY.org, a kind of social network for kids that love to make things (DIY = Do It Yourself). DIY.org has been conceptualized to help those kids and its parents to enjoy the DIY experience, and makes use of gamification to engage its users and help them to discover new things to make.

diyHomeWhy do I like DIY.org so much:

  • It’s been designed for kids, so parents has to allow permission to their kids to register DIY.org
  • It’s for makers, and all the platform is oriented to discover new skills to learn
  • It uses gamification to help kids discover new skills and engage them to the platform and also to the DIY movement

How DIY.org uses Gamification

diySkillsBadges are the first Game Mechanic that we find when entering DIY.org, because learning new skills gives you new badges. And because everything is based on skills, almost every action you can do on the platform, focuses you to earn new badges. When learning a new skill, DIY.org presents you several challenges (usually 7-14 challenges), and you need to do at least 3 challenges to earn the badge.

If you want to have a deeper knowledge on a specific skill, you can do more challenges, but reducing the number of challenges to 3, makes it easier for kids to earn their first skills, engaging them with the dynamics of developing new skills.

If you don’t like the main skills proposed by the platform, you can also explore other kind of challenges, that are proposed by other members in the platform and categorized in categories such as Minecraft, Lego, Rocket, Stop Motion, etc. It really surprises me (for the good) to discover that there are a lot of interesting challenges related to a computer videogame such as Minecraft.

Another game mechanic used in DIY.org is the progress bar. It has been simplified to a 3 steps process, that encourages kids to get permission from their parents, make projects and earn skills and share them with their friends.

diySteps

I’m sure we will hear and read a lot about DIY.org in the following months, specially when the DIY movement is going mainstream as Chris Anderson states in his latest book.

Die, Flash, Die

I have to admit it, I hate Flash, and I’ve been hating Flash since I can’t remember. I hated when almost all companies thought it was cool to have a website completely built on Flash, and it was almost impossible to find the information you were looking for, because the websites where built as an exhibit of hundreds of effects and animations. And I hate that any browser I use finally crashed when managing several tabs containing several flash banners. And when you see all the wonderful and interactive websites you can build nowadays upon simple HTML and CSS you can’t understand why Flash technology is still present in million of websites.

So when I see the job trends related to web technologies and check how job trends related to Flash technology is starting to fall down, and companies are starting to require more developers with skills on html5, iOs or Android, I start to think that we are starting to think clear about web technologies. So… Die, flash, die! and make the Web a better place to “live”.


die-flash

10 reasons everyone at your startup should blog

Corporate blogging is on the rise, and most startups use their blogs as one of their best PR tools. But in most corporate blogs, you can see only a few contributors, most of them cofounders, marketing people or even content creators. That means that a great part of the team is not writing, even eventually, to the corporate blog. I think the best approaches to corporate blogging should involve everyone in your startup.

More content

This is one of the most obvious reasons for making everyone writing to the corporate blog, and also the less important one from my perspective, but it’s a good reason after all. If you want to position your startup, you need to generate content, and publishing more content is a way to improve your actual positioning.

More quality and diversity

More content doesn’t need to mean more content regarding the same interests. If your development team startups contributing to your startup blog, they can write about what they care about, so they’ll probably write about different stuff than marketing people. More diversity means more interestingness for your actual readers and you’ll be also expanding the actual reach of your blog.

Educate everyone to understand your clients

Blogging means also documenting and learning about new stuff. It’s an opportunity for everyone at your startup to start trying to understand what concerns to your market. Even if you have awesome developers, that doesn’t mean that your developers and other members of your start team understand the actual need and concerns of your clients. Make them to research and write about topics that could be interesting to your potential customers, educate your team to understand those problems, so when they’re developing new features, they would better understand how to do it well in order to fulfill your customers interests.

Give visibility to everyone working at your startup

Most of the time we forget companies are built around people, but people is the most important asset in your startup. So if your startup team is your primary asset, why are you hiding part of your team from the world? Make them appear in your blog, make them visible to your customers, and create a more human-friendly company.

Generate trust

Eventually, anyone at your company would be talking to a client or potential customer, because there’s a problem when your customer is using your product (that represents mainly your support team), or even because they found each other at any event and they’re talking about what your product could do for his/her company. If you make your team public and visible, it’s more probable that any customer knows the name of some of your team members, so it’s possible that the customer previously knows about the people from your team he is talking with right now. Knowing a person, even if you only know him due to several posts published in a corporate blog, generates trust, because we trust more the people we know. So making everyone at your startup contributing to your blog, would eventually generate trust to your clients base.

Share Knowledge

You’re a startup, so you hire great people and professionals, who accumulates knowledge about what they do everyday. Sharing knowledge is what has made us evolve as society, so sharing your team’s knowledge would help other to solve specific problems they face. Sharing knowledge also generates trust, because if you share interesting problems and solutions, your startup would become a reference on those topics, making your clients feel that they are on good hands.

Test new ideas

Frequently, in a startup, someone from the company has a new idea that would become in a new feature, or even in a side project that would become a new product. When that happens, certain people on your company talks about that idea in order to decide whether that idea can generate something interesting for the company. But it’s not so frequent that you share that idea among your clients, who are the right people to be asked about the potential interest. Sharing those new ideas on your blog, would help you to test the ideas and receive clients feedback that would help you to model a new feature or product.

Get answers to your actual problems

If you share knowledge and make people lifes easier, why wouldn’t you use your blog to receive help about your actual problems? If your developers usually writes about code hacks, or interesting technologies related to your company, you’ll be creating a community of potential helpers to your technical problems. Don’t be afraid to share your problems with others, I’m pretty sure you would find that sharing them is a very good way to find the perfect solution.

Make everyone be nearer sales

This is a real interesting and problematic point for most startups, so I feel I’d write deeper about making everyone at a startup being more near of the sales team of the sales process. Attract people to your website is one of the first steps in order to make sales, so if you make everyone write in your corporate blog, you’d be starting to walk into the right direction.

Fun

At the end, blogging is fun, so make it possible for your startup team to start making fun contributing to your corporate blog.

Why $1 billion for Instagram is a good deal

Facebook just announced that has adquired Instagram for about 1 billion dollar, and the first reactions in social networks has appeared. Most comments argue that $1 billion valuation is too high, and try to show several metrics such as $0 revenues, or $83 million per employee. But we can look at several other directions that points out that $1 billion for adquiring Instagram can be a really good deal for Facebook.

First of all, look at photo sharing numbers at Facebook: 136.000 photos uploaded per minute, that’s over 200 million photos uploaded per day, and a total of 140 billion photos uploaded to Facebook. That’s really a lot of photographies in Facebook, and the reality is that Facebook Photos sucks. So uploading and sharing photos is one of the keys of Facebook’s success and one feature that engage users and Facebook has not been really designed to upload and share photos in a proper manner, and that’s why they needed to make an adquisition in the photo sharing segment.

And when you look for great photo sharing services, focused on mobile uploads (because most photos in Facebook are uploaded through a mobile phone), what great startups we can consider? There are a lot of players, but Instagram has been able to become the most important player in the segment, specially because it’s photo filters (that are awesome!), and its simplicity. In fact, Instagram numbers are really impressing: it become the #1 application in the App Store within 24 hours of launch (October 6, 2010), it holds the record as quickest app to reach 1 million downloads (December 21, 2010), and it surpassed 30 million users in early March 2012.

So, what’s Facebook buying for $1 billion? It’s not Instagram user base, because most Instagram users are also Facebook users. They aren’t buying Instagram because it’s a real competence of Facebook Photos, because numbers clearly show that Instagram is far away from photos shared in Facebook (1 billion photos uploaded to Instagram vs 140 billion photos uploaded to Facebook). Facebook is not paying 1 billion dollars for a trendy startup (that would be really stupid). The fact is that Facebook is buying the best photo sharing technology available in the market and the best team of engineers that would make possible for Facebook to improve Facebook Photos in order to transform one of the Facebook’s best features into a really useful tool.

Zuckerberg’s statement is clear about that:

But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.

And that technology and the team behind the technology really values $1 billion? It depends on how you want to evaluate the deal, but if we analyze the statistics, we notice that, this year, Facebook’s users will upload over 100 billion photos, and if we forecast these numbers (and the growth rate) for the next 10 years, we are talking over 2000 billion photos, so it means that Facebook is paying 0,05 cents per each photo uploaded to Facebook in the next 10 years (that’s not a lot of money).

We should also address another important topic related to Facebook: it’s battle against Google. Facebook is trying to provide the best possible (and integrated) web experience to their users, and if Facebook users want to upload and share photos, giving them the right tools, will engage those users, and will make it easier for Facebook to become “the Web” for most users. Facebook is trying to be a web sandbox where most users have everything they need (mail, photos, games, etc.). Most Facebook services excede the needs for a medium user, but photo sharing is almost the only service that can be totally reinvented in order to fulfil user’s needs.

Facebook is paying a lot of money for Instagram, that’s right, but I’m sure it’s a really good movement, and in a few years Facebook will be able to show that it has been one of the best adquisitions Facebook could have done.

Data is the new sexy

Social Media has shifted the way we use and see the Internet in many ways. In fact, Social Media is the main reason for many users to connect to Internet, and has been a great contributor to the rise of the Mobile Web. Social Media has changed the way information is generated, democratizing the generation and consumption of information, and along the way, it’s radically changed the way Web Information Systems works. Most Internet based companies now need to manage such amount of information that overwhelms their previous technological infrastructure.

And then Big Data and NoSQL trends appears on the market, and everything changes, because knowledge is money, in fact, for most startups, knowledge is its core value. Knowledge about their users behavior, about news trends, about relationships among users, or whatever piece of information you may be able to collect from your web application. Knowledge is what Facebook “sells” to their customers (brans that want to show their ads to a specific segment of Facebook users). Knowledge is what Jason Goldbeg (Fab.com founder) sold to their potential investors in order to raise a $40 million round. And knowledge is what Twitter has been collecting and analyzing in order to increase its market value prior to develop a working business model.

We are now in the Internet’s Knowledge era, because for any Web application, knowledge is key. And for generating knowledge, we need to process information, gathered by collecting data. So we need solutions that allow us to collect, manage and explode, vast amounts of data. And that’s why Big Data is now everywhere, from Social Media to eCommerce, everything is (or will be real soon) powered by Big Data applications, and that’s why the figure of Data Scientist has become a buzzword in the startup arena.

Venture firms invested a total of $1.1 billion in 2009, $1.53 billion in 2010 and $2.47 billion in 2011, in fields around big data, such as data processing or database management systems. That’s a lot of money, and will be increased in the next years, opening a lot of opportunities for new startups and business ideas. Big Data companies like Mu Sigma, has been able to secure more than $100 million in a recent investment round, a quantity not so common for non business-to-consumer startups.

So Data is becoming the new sexy, because for many B2C startups, analyze the data generated by their customers is their only chance to develop a solid business model, and for most B2B companies, Data is the way to optimize their processes and be more competitive. And for Venture Capitalists, Data is THE opportunity, because Big Data is going to be everywhere, integrated within any company as a Data Layer among any of their processes.

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