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Think Big. Move Fast.

There have been a lot of posts on startups laying people off, losing founders or closing down in the last couple of months, part of the natural cycle in the valley. But what has disturbed me has been some of the mean spirited things that have been left in the comments to some of those postings. Often anonymously. It really bothers me. People can (and do!) reasonably disagree about a company’s business plan and prospects, but some of this stuff is just over the top.

The great thing about Silicon Valley has been the entrepreneurial culture, and the acceptance that working for a failed startup is not necessarily a judgement on your character or your ability. But recently there seems to have been a change in attitudes at least amongst some people (trolls?) who are taking joy in the misfortune of others. When a startup closes down, founder’s dreams die. Employees find themselves looking for work, and at least for a period, worrying about paying their bills and supporting their families. This should never be a cause for celebration.

I don’t personally know the teams at Backfence or Peerflix or FilmLoop, or Bitpass, or Findory, or Browster or many of the other companies that have recently entered Techcrunch’s deadpool recently, but I think that they are to be applauded for their willingness to take a chance on starting a company, not condemned because that particular company wasn’t successful.

Companies die, founders and employees learn from the experience and move on, and hopefully start more companies. I for one would love to see the second acts from the teams that are newly freed up.

Update: Hot or Not founder James Hong has a good related post.

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I’ve been thinking a bit more about how consumers adopt “new” products online recently, in part because of a couple of recent posts I wrote in reaction to rumors of a Safari browser for Windows and questions on the value of widgets. What struck me is that very often, the “best” products don’t win majority market share. Many claim that Firefox is a “better browser” than IE, and I’ve lost count of the number of times I saw a pitch from a video sharing site last year that claimed to be “feature for feature, far superior to Youtube“. Yet IE and Youtube dominate their markets. And the same is true in so many categories.

Cynics might attribute this to bad luck or my favorite, user stupidity (because its always good to have contempt for your customers), but often there is a pattern at work. In a new consumer market, the winners win on distribution.

In a new consumer technology market, users don’t yet recognize that the category exists. They don’t recognize that they have a problem, so they are not going out looking for a solution. They’re not issuing RFPs, they aren’t even compiling shortlists of possible vendors. They are stumbling on solutions by accident. And that is why distribution is key in a new market.

Lets take an example; online travel. The early market share winner was Travelocity/Preview Travel. They won that early market share on the back of distribution deals with Yahoo! and AOL. In the late 90s, most internet users didn’t even realize that they could book travel online. But they were actively using portals, and through the “travel channel” on the big portals, they stumbled across the online travel agencies and started booking online.

Google is another example. It was a “better search” product when it launched in 1998, acknowledged among the Digerati. But it wasn’t until it struck its distribution deals with Yahoo! in 2000 and then AOL in 2002 that it really started to get used widely. Before users were exposed to Google through their portals, they didn’t know that better search existed.

Product is of course important. Your product can’t be actively bad. If Travelocity’s booking engine didn’t work, or if Google’s PageRank didn’t produce more relevant results at that time, then users would not have come back. But they needed distribution to be found in the first place.

Updating to 2007, the same principles apply. But whereas portals were the only path to distribution in Web 1.0, today social networks offer another way to reach internet users. But now the “discovery” process is a little different. Take embedded online video. A year ago, users didn’t understand that this was a category, they didn’t realize that they wanted to embed videos in their profile pages. But when they saw an embedded video on a friends profile, they could say “Hmm, I want one of those”, click through and get one for themselves. Now the category is established in users’ minds, and brands have been established. But earlier, “distribution” was what drove growth.

Social networks offer a different challenge than portals. Whereas you could get distribution by doing a single business development deal with a portal, on social networks, you need to convince each individual user that you’re worthy enough to keep. But as you get more penetrated into the community, a new user is more likely to run into you and try you. So scale matters and it is a virtuous circle – the more share you get the more likely a new user is to stumble on you as a provider. Going up against an “incumbent”, even with a “better” product, can get very hard. Distribution and adoption end up meaning almost the same thing. This is why Rockyou and Slide are the number one and number two fastest growing widget makers in social networks, and why VCs pay so much attention to “traction” and so little to the fact that its easy to replicate the features of these widgets.

The other web 2.0 distribution mechanism is virality. Users inviting users is the other way that a user can get exposed to a new product – solving a problem that they didn’t even know that they had. Ravi has posted on this a couple of times so I won’t go into it again.

So the next time you build an absolute killer product in a new consumer category, don’t stop there. Unless you’ve got a plan to get new users exposed to your new product, your efforts may be for naught.

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Todays’ NY Times article on Widgets and the blogosphere reaction brought to mind Josh Kopelman’s post last May on the 53,651.

Josh made the point that too many companies are targeting an audience of 53,651 (Techcrunch‘s audience at the time) rather than the “real world”. Before joining Lightspeed last year, I’d spent the last 10 years working for large internet companies whose audiences mirror the internet user at large (CitySearch, IAC, AOL and the “old” Netscape). I wholeheartedly agree with Josh’s thoughts that the Valley can be an echochamber where opinions can radically differ from those of the general public.

The NY Times’ piece focused on widgets as “digital bling” and gives equal weight to several different types of widgets; (i) self expression widgets, (ii) widgets offering some utility to blog readers, (iii) revenue generating widgets and (iv) widets offering some utility to blog publishers. It mentions MySpace in passing, but is very focused on widgets in blogs.

Wow. What a disconnect from the reality of how widgets are actually used. If you did a straight up count of all widgets embedded everywhere on the web, I suspect that you’d find that the VAST majority of widgets are on social network profile pages, not on blogs. And they are ALL about self expression. My SWAG is that classes (ii)-(iv) would probably represent less than 10% of all embedded widgets.

Blogosphere commentary like this from Deep Jive Interests:

Quite frankly, I think that all of the pub that widgets have gotten and continue to get (2007 the year of the widget? Playa, please!) distract from bloggers creating great blog content in the first place. The emphasis on bling detracts from bloggers focusing on what matters most: creating fresh, interesting, passionate content which is the REAL reason why people come to read any blog.

or like this from the admittedly deliberately controversial Valleywag

A violation of blog principles. Google’s focus on the search box was a refreshing antidote to confusing portal pages such as Yahoo’s. Similarly, the blog represented a pared-down way of reading news: the most recent item at the top; scan down the page; stop when an old headline appears. Widget clutter is not simply distracting to readers; it compromises the original appeal of the blog format.

[I cringe as I write this, awaiting the inevitable snarky response]

seem a little blogger centric. But that is the nature of the 53,651. Slamming widgets because they distract from the content when put in blogs is like slamming TVs because they distract from driving when put in cars. But TVs belong in the home. And widgets belong in social networks.

At least Om gets that:

The real excitement of widgets in on personalized pages, mobiles and the desktops.

Now there have been legitimate questions raised about the busines model for widgets which I’ve addressed in a previous post.

But writing off the whole category as hype because glitter text or picture slideshows detract from your deeply meaningful blog posting seems a bit of an overreaction. At least judging from an average Bebo users page or an average Myspace users page the general public quite likes to express itself through these widgets. Looks like we, the 53,651, are in the minority on this one.

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Just a short addition to my previous post. There’s been some interesting commentary on the need for both “art” and “science” to induce viral growth. The science component is comprised of a website’s ability to systematically measure all aspects …

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Two good posts today on why VC’s don’t sign NDAs, one from Brad Feld at Ask the VC and the other from Rick Segal at The Post Money Value.

When I was VP of Strategic Planning at IAC and …

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For websites with social networking or community features “going viral” or acheiving a viral coefficient greater than 1.0 represents the holy grail of traffic acquisition. What’s behind this? Going viral means that new user acquisition costs have essentially been driven …

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Toby Coppel recently posted on the Y! corporate blog with his thoughts on interesting startups. He calls out some companies he finds interesting (one of which Y! has since acquired!), talks about how this wave of startups is different …

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Patrick wrote a post on “The New Must See TV” on Friday and I know that he wanted to include some information on The Venice Project but was unable to say much because of the NDA that we signed. However, …

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Download Squad reports on a rumor that Safari might be released for Windows, citing Mary Jo Foley who found the speculation on Mozilla’s Firefox 3 requirements wiki. (The speculation has since been removed form the Mozilla wiki.)

The …

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On Wednesday, Yahoo! and Akimbo announced a new partnership to bring the most popular selections of Yahoo! Video to the Akimbo video-on-demand service. This announcement comes on the heels of the launch of Apple TV, a set top box …

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