There seems to be quite a flurry of good business ideas being directed towards me in the past few days. One thing they ALL have in common is exponential growth. This is not exponential growth in customers, but in the size of the idea.

One sentence that I find myself regularly repeating is “There are 6 billion people on this planet. You do not need to appeal to ALL of them”

Yes, if you have a great idea, people WILL get excited about it, they will tell you how it applies in many situations and how much an extra feature would help them.

But while your idea is growing ever bigger, your prospects of success are shrinking just as quickly. Rowan’s diagram explains this phenomenon nicely:

There are MANY downsides to having 6 Billion people on this planet. One of the few upsides is that you can have a super focused, simple and targeted product that 99.9999% of people have absolutely no use for, and your target market will still be multi-thousands or millions of people.

I know it’s scary and adding new target audiences feels intuitively like a safe way to play it, but the reality of the situation is that the more you DILUTE your idea and spread the appeal, the less that your main and most profitable market will like it.

When you have that target market eating out of the palm of your hand, that is the time to start looking at how to attract a different group of people. If you are unsure of whether your idea is enough to get your initial group knocking down your door, then maybe it is the idea and not the size of the market that needs analysis…?

The Decisive Flow team headed along to the Webstock mini conference on Tuesday night.

Apart from now knowing more about tag clouds than we ever thought we would, we also learned about living on the fringe. And the fringe is an exceptional place.

I loved the quote “We didn’t think we’d make any money off it, and we didn’t think it would last”

What a brilliant way to form an idea or start a company. I’m not being sarcastic. To do something purely for the love of it. How could you not be successful? Despite the fact Wellington is so small everyone is like your next door neighbor, the world is quite large, large enough for other people to share your passion and buy your stuff.

People who live on the fringe don’t start something for the sake of the ability to call themselves an ‘entrepreneur’. In fact I don’t even think they would consider themselves entrepreneurs.

People on the fringe don’t care about success. Success to them is living the life we all dream of.

People on the fringe, it seems, very quickly get off the fringe, upon achieving traditional success (Bill Gates was a fringe dweller, now his company is a fringe blocker)… Unless they are a special type of person who was born to decline adoration in favor of a good time.

People on the fringe probably can’t smoothly get their ideas across and charm investors (Which I DO believe was the point of the CodeBlacks team in the Half baked Challenge), but they prove that slick presentations mean nothing in comparison to just going out there and doing it.

Despite what the speaker said (and I’m sorry, I’ve completely forgotten his name, I’m terrible with names), I don’t believe companies CAN harness the fringe. It’s like when people catch hackers and try to train them up to work for the ‘good guys’. You gotta numb the fringe and tame the beast before they can work in your world. And when you have done that, they are no longer what you are after.

What I love about the people on the fringe is that you probably will never pick them. They wont be at the very events we go to to figure them out, they don’t talk up a storm about their achievements – they don’t even look at their achievements as achievements, just something they love to do. I think that’s what I found funny in the speech, the very concept of this type of person flies in the face of coming up with any strategy to harness their power. We know they are there, but no one can do anything about it. That must freak out the big guys.

I was at the business center last night for a relaxed wind up to the year. Melissa Clarke-Reynolds (founder of Pay Global and one of New Zealand’s top female entrepreneurs) was there and ran us through a couple of her predictions for top trends in 2008. I thought that was kind of a fun idea, and thought I’d hit you with mine:

Greenifying transport – doing something about climate change

I think everyone has noticed a large shift this year in public awareness of climate change. It’s been really cool but also really frightening to see that a lot of what we’re doing about it, is talking. In New Zealand still, we get up in arms that the council is ‘anti-cars’ when they lower the speed limit along some of our city’s most pedestrian-heavy streets, we have a serious issue with a lot of car drivers who seethe in anger when they see a bike taking up valuable road space. Our council is pledging to make us the first carbon neutral city and yet find decisions such as allowing bikes on trains for free rather complicated.

I have a friend who is mid campaign to help the council understand the value of integrated transport systems and drive awareness of active transport. There is a whole heap going on in this area in Wellington, that, unless you knew someone as crazy as her, you wouldn’t know about. I think in 2008, we will reach the tipping point and people here will seriously start to question their use of cars as a primary method of transport.

Music shops will start to fade

One of our major retailers has already closed its doors and blames the internet and cheaper music buying alternatives.

Well…. duh!

Turns out people, when faced with the option of music that costs more and the same music that costs less, will go for the cheaper options most times. The value in a music store used to be the knowledge ideas they contained of new music and music you may like. You can get all this off myspace and iTunes now, so why go to a shop?

I think we’ll start to see this with a lot of industries, as the internet makes it cheaper and faster to access the value that was traditionally held in stores. This may sound frightening to some people, but I suspect these industries will simply evolve to exploit new opportunities: I hear the music industry now makes more money off selling cellphone ringtones than they do off cd’s…

The kids who have grown up with the internet get one year older

Why is this important? Because they are very different from us and the older they get the more they will take control of this beast we created but they understand. Things that worry people like my parents, such as getting a virus with every email, or clicking the wrong button, or their browser accidentally disappearing… are things that these kids don’t blink an eye at. They are already teaching their parents how to use technology like the internet, they are not held back by the same mental barriers we are and I can’t wait to see what will happen when they start to actively shape it.

Social networking sites will take over the world

I think Melissa was saying of every 1 million people in the world, 88,000 belong to a social networking site. I suspect that will probably double next year. Love them or hate them, applications like Facebook, Bebo and Myspace offer at the very least, enough value to stick with them. And as we all signup and enter our personal details, they gain ever more power… I have no idea what that will result in.

More virtual businesses

We have long since managed most of our business online, in fact, realistically, this business is 3 brains, 3 computers and an internet connection. So is PlanHQ, and many of the other startups here and around the world. There is virtually no barrier to entry… As long as you have an idea, some form of initial cashflow (as in a part time job or capital), you can have your own business. As the internet generation start to head towards teenagers, I suspect that we’ll see some seriously young entrepreneurs giving the world a run for it’s money.

I’m always keen to interact with the computer in a more natural way which gets us all away from having to narrow our vision to the scope of a screen and limit our hands to to tapping and clicking. In terms of interaction with our computer, heres something that brings the computer a bit closer to moving at a speed that we think as people. This pretty cool demo from Perceptive Pixel shows where things are getting to, Thanks Trent, Sam and co from Optimal Usability for the link.

Beyond the Mouse and Keyboard

It’s one of the first things I say when people ask what they should do to grow their business: build relationships and find partners!

Dependency & Cross Over = Good

A good partnership will mean that you focus on doing something really well and build a reliance/dependency on your partner doing something well in a different area. The idea is that both partners are required to make your customers happy. Often there will be cross over between what you and your partners do which can be percieved as competition, but you need to get past this quickly and decide who’s ‘BEST’ suited to do which part, cross-over is a healthy sign that you’re both focused on the same value proposition for your customers, which is key to you delivering good service.

Risky Business, but a risk you can’t afford not to take 

Naturally all this means risky business because you now need your partner to perform in order to succeed. This dependency and the chance of having too much cross-over are the 2 big reasons why so many business don’t partner, I’ve seen and continue to see it so many times, people just can’t get over the hurdle of letting another business look after something thats key to their business, even if they need to solve a problem.

A Magic Partnership with SilverStripe

I’ve known the founders and directors of SilverStripe web developers and makers of the worlds best Opensource CMS for years and have always admired their energy, persistence and commitment to making it happen. So when things were getting a bit tough with the development of our first web product I started chatting to MD Tim Copeland a bit more. 6 months later and into last year when we needed some work they threw us a bone, which meant a lot to me and helped our business out a lot. Last year after meeting up with Rod Drury and getting online business planning software service PlanHQ started, me and Nat were keen to grow Decisive Flow so we could take on someone else to fill the gap, so was on the hunt for an acquisition, we quickly found one and together Decisive Flow and SilverStripe jointly acqucired GoodUse, and together can deliver more than ever before, sharing sales responsibilities, they do tech we do design…

New Base for the Business

I’ve been chatting to Tim Copeland about shifting the business down next to their cool offices for the last couple of months, and we’ve just this week moved right next door to SilverStripe, which is great so they’re now just through the glass divider.

Failures are part of the journey in any success and partnering is no exception 

Nat wrote about When Partnerships go Bad the other day, and she was referring to a very average finish to a partnership we setup with an Australian web design business about a year and a half ago, which ended up being a pain for sure. I was pretty aware upon entering into it, that it was not the best match, decisions are all about circumstances and timing and the business had just burnt through the last of the $150k I had invested into getting Decisive Flow (Then evolutionone) off the ground, and while I had a 90% finished web product, and we’d built-up some good capability in Nat and another guy and good mate involved at the time Sam, I could no longer afford to support the product development and team financially and needed to get some income from services ASAP.

The Good side of the bad 

The most important thing about that partnership was that we had web design work flowing within days of engaging with them, which solved priority 1 for the business at this particular point in the journey, so to me the partnership had already served its purpose, it limited my requirement to go into any significant debt. The fact that they didn’t pay their last bill and were slow on projects was a right pain, but by that stage, our business was in a very different position, and while a nuisance, it was no longer critical to our success.

So if you’re on the verge of partnering, or not too sure if you’ve got the right ones lined up, Get into it and make more happen : ) 

There’s a lot of talkers in the world, but what separates those with a voice from those who just make noise, is doing – making things happen!

A $700 million company in 7 years

After reading a blog post by friend Rowan Simpson (Development Manager and ex-shareholder of New Zealand’s auction / marketplace site Trademe) who was looking back upon a time when he was out round the country pushing his business flathunt.co.nz, he reminded me that it was 1 year ago today that Trademe was sold to fairfax for $NZ700 million. (Valued at just 15 times earnings for a business now firmly planted at the centre of New Zealands domestic trading, it’s quite the deal for Fairfax). Rowan said it has been a week of reminiscing, must be some cool times to look back on, good on you guys!

An overnight success? – Well 7 years is one very long night 

It blew most people away in New Zealand, which is understandable, we don’t see many businesses and deals of this size, let alone those born from small groups of individuals (where the real action happens), but on the other hand, what it showed is that most people just don’t get whats happening here, with the individuals who really have remarkable vision and action at play here. The fact is some people are working away all the time, everyday, making things happen. They follow their ideas, think about and build valuable businesses and eventually, with enough persistence, the right direction, focus, and good people, naturally, not at all surprisingly, these people pull off extraordinary and big things. Businesses like Trademe don’t just happen, people make them happen, and it took them… well as long as it took!

Do Before you think

I remember reading from a distance the articles when the sale went through hoping to catch a glimpse of the words from the horses mouth. As a doer, a creator, a risk taker who’s continued to put every $ and hour on the line to make something happen ages, I wanted to hear a few sneaky words from the horses mouth. Here’s a few words I remember coming through the paper from Sam Morgan, Founder and Major shareholder of Trademe:

Sam Morgan on Making Decisions and Doing

"Some people are better decision-makers than others,"

"Some people spend a lot of time sitting around talking about things they’re going to do and others get out and do them. I think there are plenty of people like that."

"Some people spend a lot of time sitting around talking about things they’re going to do and others get out and do them. I think there are plenty of people like that."

When Asked: "So that’s the trick? To do rather than think?

"Yeah, I think so. Everyone says a lot of people will no doubt think, ‘oh, I wish I had that idea’ but what they should think about is ‘what ideas do I have?’ And get off your bum and go and do it."
source: NZ Herald

Doing is the best part of Thinking 

That’s not saying there wasn’t plenty of very insightful thinking behind the move to make Trademe, but I guess the message I got from this, and something I really believe in is;

Your best thinking is embedded in your next actions, so you may as well just do, and face whatever consequences meet you on the other side.

If you ask most people in business if they would like to have an up to date and useful business plan that they feel they are going to achieve, most say absolutely! if you ask the same people if they have this plan, most say, no.

So Whats the problem?

Is it that planning is one of those nice to haves that you just dont have 'real' time for unless you absolutely have to because you're getting investment or applying for a loan? We think not. Nat and me have always have various versions of plans for our business as its continued to take various changes in course, and among other things we're about to start a new venture very shortly (more on this soon), so its again on of those required times to get right up to the moment with our planning,

not the main reason to plan, but one that certainly kicks you into gear. Also in my previous working life I was involved in international business development for a New Zealand energy efficieny technology business and my final work there was helping secure $11million in an 18 month capital raising effort that saw myself and the Chief spend 3 out of 12 months roaming the US from Sanfran to New York selling the story to investment bankers and VC's seriously re-hashing our buiness plan some 13 times. In the end the money came from home, New Zealand. You really do get sick to death of a this sort of document, but all the while understand its importance in getting you and the team focused, growing the business, and getting investment.

Business Planning Fails because:

• Provide limited value in daily, weekly activities
• Have to be read top to bottom
• Provide no means of monitoring, evaluation and feedback
• Difficult and boring to digest
• Very time consuming to maintain currency
• Lacks integration with other business activities, information and systems
• Difficult and costly to keep all stakeholders informed (eg. Investors, team members)

The Solution

Business plans need to be simple and loveable, and useful for your whole team, and anyone else who has a vested interest in your business (investors, banks…). Read

The Zen of Business Plans by Guy Kawasaki for some really useful ideas.

Business plans need to be simple and be something that you can immediately link to your daily actions. They need to be easy to update, and easy to monitor progress against. They need to provide people quick insight as to when they've changed and let everyone whos contributing to or benefiting from the plan know whats happening.

Put yourself together a simple and loveable business plan and bring your planning to life. 

One of the critisisms of evolutionone was that it was before its time and small businesses would struggle with the idea of managing their entire business on the web. I suppose we are young enough and technical enough to have always been involved in businesses where management through the web was a goal, not a fear and because of this, sometimes we overlook the hesitations of our less web-based counterparts.

Why You Need A Web Office is a good outline for the more reserved, although I would like to see a shortening of the timeframe before the early adopters move to a fully web based office. Especially newer, smaller businesses who don’t have a legacy IT department, haven’t invested heavily in Microsoft products and who could really benefit from the reduced costs and greater efficiencies of web based office products. I think the creation of web based business management products opens a massive opportunity for small businesses to become far more competitive and the sooner they are adopted by the ‘fortune 5 million’, the better.

The last couple of years of the web have really seen a major change, one that is now being grouped together under the banner of web 2.0. You’ll hear a lot of people talking about web 2.0 is, and while I might outline this in other articles, the most important thing about it for you, me, and the majority of the world is that it represents another major step in the de-centralisation of control and dissemination of power.

The continuing shift in focus from the few big ones (eg. major corporates, celebrities) to the many little ones (small buisnesses, groups, communities and individuals) is a natural process born from many people’s individual and collaborative desires to be more themselves, more fulfilled, more in control of our own lives and less at the mercy of others.

There’s a saying on the web and in new marketing called the long tail. For what the people behind the term are saying, checkout this blog called the long tail.

Now I dont wan’t to constantly introduce you to new buzz words, that in the end are quite often the same as concepts you’ll already understand, but it’s a term that’s likely to get a lot more use, and its a way of looking at the world that you’re probably already quite familiar with. When we first started in Business 3 years ago, we were called Little Ones. The thinking behind what we now do is the same as what it was then and can be likened to the long tail concept:

The future will be about more small businesses, groups, communities and individuals with an aggregate power that matches and eventually exceeds that of a small number of big companies and high profile people.