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The Answer Factory: Demand Media and the Fast, Disposable, and Profitable as Hell Media Model

The Answer Factory: Demand Media and the Fast, Disposable, and Profitable as Hell Media Model

This insightful article from Wired accelerates those ongoing, never-ending content debates:

Quality vs. Quick

Human vs. Machine

Profit vs. … well, this is where the debate breaks down because if a business doesn’t make money, its a hobby.

Using algorithms to create content is happening more and more as profitable search queries become the first and most important consideration. Businesses such as Demand Media are out-producing everyone when it comes to creating profitable content. Too soon the days of owning a niche online will be long gone.

So what’s the solution to this latest disruption? More disruption.

The Customer Development Theory

The TechCrunch post by Nigel Eccles is chock full of great insights and links into Customer Development Theory – a product development methodology formulated by Steve Blank. If you are an entrepreneur of any kind, it’s a must read.

The Customer Development Theory was created by Steve Blank, a former entrepreneur and investor, and is simply this – there are 4 steps of customer development: customer discovery > customer validation > customer creation > company building. The first two steps are a feedback loop and the most important:

Customer Discovery identifies the people with the problem. Customer Validation is where you push out versions of the product and attempt to gain paying customers.

Steve Blank delivers an in-depth presentation on the process here and if you don’t watch it then you’ve already made a bad decision today.

A takeaway from his presentation is that you have to know the customer’s problem you are solving and more importantly, you have to know everything about that customer. His conviction comes from his long experience with entrepreneurs and investing, from his observation that more startups fail from a lack of customers than a lack of product development. If you don’t “get out of the building” and get to know your customer, then you are hypothesizing. And if you hypothesize into product development, distribution and sales, you dramatically decrease your chance of success.

This also relates to Mark Cuban’s exhortations at the 2008 TechCrunch 50 where he listened to startup pitches and was the only one who asked about sales – where were the real, money-in-the-bank sales? Because once the issue of sales comes up, the natural question is, who’s buying, who is the customer?

We have all been down this path before where we think we’ve found a gold mine of customers so we developed/marketed products to sell them, only to discover that we didn’t have the customers we thought we had. We didn’t have those customers because we didn’t know exactly who those customer were, what they did, why they had “the problem,” and what they were willing to do to solve the problem, ie. buy the product.

Eric Ries is a student of Steve Blank’s, and together in the afore mentioned video they break it out into 2 simple, parallel processes: customer development [the problem] and agile product development [the solution]. Both processes feed and inform each other at the same time. Eric also offers a master class for startups that focuses on both the customer and product development approaches – it’s worth checking out.

No doubt Steve Blank’s book that discusses the Customer Development Theory – The Four Steps to the Epiphany – will be rising on the Amazon charts soon enough.

When Cheap and Simple is Just Fine

Robert Capps articulates one of this decade’s most prominent themes in his recent article from Wired, The Good Enough Revolution. Reality TV shows, Flip video cameras, free YouTube channels, Google docs, netbooks – we are wildly riding the “good enough” wave. As he puts it:

The world has sped up, become more connected and a whole lot busier. As a result, what consumers want from the products and services they buy is fundamentally changing. We now favor flexibility over high fidelity, convenience over features, quick and dirty over slow and polished. Having it here and now is more important than having it perfect. These changes run so deep and wide, they’re actually altering what we mean when we describe a product as “high-quality.”

Here’s the takeaway: the good news is that this trend is ideally suited to the times.

As the worst recession in 75 years rolls on, it’s the light and nimble products that are having all the impact – exactly the type of thing that lean startups and small-scale enterprises are best at. To some, it looks like the crapification of everything. But it’s really an improvement. And businesses need to get used to it, because the Good Enough revolution has only just begun.

As more and more industries move their business online, they too will find success in Good Enough tools that focus on maximizing accessibility. It’s a reflection of our new value system.

Reading the entire article is worthwhile.

How Entrepreneurs Save the World

In case you missed it [I did], the fine folks at The Economist put out a report on Entrepreneurship last March. Their shimmering conclusion is that entrepreneurialism is alive and well and thriving the world over.

However, the main takeway from this insightful report is that entrepreneurialism needs to be rethought, and in almost all instances it involves not creative destruction but creative creation.

They also posit the Five Myths of Entrepreneurs:

  • The first is that entrepreneurs are “orphans and outcasts”.
  • The second myth is that most entrepreneurs are just out of short trousers.
  • The third myth is that entrepreneurship is driven mainly by venture capital.
  • The fourth myth is that to succeed, entrepreneurs must produce some world-changing new product.
  • The fifth myth is that entrepreneurship cannot flourish in big companies.

The report is wonderfully re-affirming that for those of us working with or as entrepreneurs, we are not wasting our lives and in fact are priviledged to working in one of the most exciting industries on the planet.

Research or Die

Basic research is the foundation of innovation. That’s true of every level of entrepreneurship, from national policies to personal growth.

Adrian Slywotzky’s article in Business Week, Where Have You Gone, Bell Labs? – How basic research can repair the broken U.S. business model, is an astute assessment of the realities facing the United States economy.

Yes, research is a crapshoot. Nothing is guaranteed; not the outcome, not the discoveries, not the directions, not the patents, not the payoffs. But if you want to build and maintain a thriving economy, you have to do research. No research means no discoveries. No discoveries means no innovations. No innovations means no new business.

According to the article, here’s what’s needed to get that model back on track:

  • Clear national goals in two or three key areas, such as carbon-free energy and preventive medicine
  • Government commitment of $10 billion a year above and beyond spending for national agencies to jump-start new industrial research labs
  • Government tax credits for corporations that commit to spending 5% to 10% [or more] of R&D on basic research

His bottom-line is that if only a dozen major companies respond to that challenge they can, in collaboration with the government, solve our jobs problem within a decade.

If they don’t…