Building a startup is easier said than done

Russ, aka Russell "Mobile Monday" Beattie, was in good form last Friday, he has given us a couple of interesting posts (rants ?) on the development of startups in this (argh, I am going to say it again) Web 2.0 world: Where’s The Ambition ? and Making Money ?

I suggested a few days ago that we should stop pontificating about Web 2.0, and focus our energy on building great companies, but Russ opens threads that I can not help but commenting upon.

Here are a few thoughts, that were actually discussed at TagCamp during the business model discussion:

• Value: whatever functionality you offer to users/clients, make sure that it generates value (as I call it, instant gratification) in the minimum amount of time, clicks or effort. Make it easy to do complex things, and super easy to do easy things. And avoid the technobabble if you target the average Internet user.
• Business: the business model is ultimately what will make a company prevail, or fail. Generating an insane amount of page views gets you good advertising, having a clear segmentation of users and behavioral/attention data gets you great advertising. And you have do to better than just relying on AdSense revenue – as in building a direct relationship with advertisers and sponsors.
• Passion, but with clarity: startups fail, founders make mistakes, that comes with the territory. If you truly believe that you have a shot at creating something different, go for it. The worst that can happen is failing, and learning from it. But please, don’t fall in the trap of thinking that you can create a market for yourself by largely replicating what current market players do and adding a couple of new things. Differentiation has to be substantial, not marginal.

On the categories which “don’t have legs”, I disagree on the following:

• Scrape Engines: there are a number of verticals where these can create value. Health, Jobs, Travel, Real Estate are all very large markets where at least one player can reach a reasonable if not substantial size. Yes, Craigslist has blocked Oodle but that does not mean the end of that industry, merely the fact that a proper dialogue on economics and processes has to take place.
• Social Anything: there will be more success stories, beyond MySpace, for the simple reason that most new services will include a social element. The key however is to make sure that an application delivers value even if I have zero friends/connections/contacts in my network, the social element bringing value add.
• CMS and RSS: there are still white spaces in these nascent segments.

Now let’s go back to work. 

Update: some of these aspects were actually discussed in the inaugural VentureWeek podcast, and buddy David Hornik’s more recent podcast on Bubble 2.0 Revisited. Both worth listening (and subscribing to). I’ll take part of VW #2 with David, Brad Feld and Dave McClure – re the world of Search. Should be fun.