Don't paint with a broad brush in this downturn
We are still in an marco economic mess.
I’m not going to pretend to predict when we will get out of it.
But there is something very familiar about this down turn as the last downturn.
There are some folks (VCs, press, bloggers, entrepreneurs, bystanders, critics) that have decided to paint with a broad brush.
That happened in the Web 1.0 crash.
In those days, some people said generically:
1. Too much money chasing too few deals. And they got out of this startup ecosystem business. Thankfully many stayed in the game or jumped in.
2. Startups can’t succeed in the consumer electronics space. Thankfully Sling & Flip didn’t listen.
3. Ecommerce is dead. Thankfully, Netflix, Amazon, Zappos and others didn’t mind those naysayers.
4. Free is dead. Thankfully TripAdvisor, Skype, MySpace, Facebook, Google and many many many others ignored them.
5. Open source is dead. Thankfully MySql, RedHat, jboss and many others ignored them.
And now in downturn 2.0 we are hearing many people make grand statements about big markets, like:
1. Online video is dead
2. Social networks can’t make money
3. Where is the business model in open source
4. Venture is dead
5. I’m only investing in things with “proven” business models.
6. Free doesn’t work.
7. There isn’t a business model with online music.
Sound familiar?
Look, here’s the thing. There are plenty of bad ideas out there and mistakes are being made. And there are good ideas with poor execution or other challenges.
At the same time there are people inventing stuff and executing like crazy. There are people innovating in almost every category and inventing new ones along the way.
I’m an optimist. I believe you can’t be an optimist only in good times.
Build a great company in any category you want.
What's most important: features, schedule or vision?
I learned a lot of valuable lessons working with Steve Perlman at WebTV Networks and Moxi Digital.
If you worked or met with Steve you would easily agree with me that his passion is nothing but extraordinary. He is positively obsessed about building amazing products.
I learned other things from Steve as well. One of my favorites is V.S.C.F. VSCF is how he would keep priorities in order.
Those letters stand for: Vision. Schedule. Cost. Features. And in that order.
This is how how Steve explained it to me:
1. Vision. Without a doubt, the founder’s vision of the product is the most important thing. Everything flows from that vision. I couldn’t agree more.
2. Schedule. Steve would often say, “Market windows don’t move”. Shipping the product on time is a big deal. If you slip late the market may no longer be there. Schedule trumps cost & features. Especially in a world of software or connected devices you can always add software improvements later (e.g. iTunes App Store is a beautiful example).
3. Cost. Cost is a bit tricky to think about when it comes to consumer internet applications vs consumer electronics like WebTV or iPhone. Cost is important. But you have to get the vision & schedule right. Cost will improve over time if the product is great along with engineering innovation & volume. We subsidized WebTV in the early days. One could argue that was a derivative of freemium.
4. Features. There is no question that features are important but vision, schedule and cost are more important. I think that’s right. Consider Twitter as an example. They shipped early, with less features and with a powerful vision that drives the company’s every move.
I keep VSCF in my mind all the the time.
We held an entreprenuer event in New York on Wed night this week. It was a great time - tons of energy and an excellent crowd of entrepreneurs, media executives, and portfolio company founders. Lots of fun.
