Wednesday, May 2, 2007

Speaker at iNNOVATE Europe' 07 from may 8-10 in Zaragoza, Spain

Stealth-mode or Open ?

The increasing number of start-up launching services on the web and especially within the 2.0 trend is bringing a new issue: should web services be developed in stealth mode or not? Thanks to both Mark Fletcher and Paul Kedrosky for their disagreement which i summarized herebelow.
Stealth mode is when a company is operating in secret for some length of time before launching their product or service. Is success of a web service inversely proportional to the secrecy that surrounded its development ? There are both supporters and opponents to this approach. Here are some good reasons for not going Stealth but rather go fast and be open as early as possible under the assumption that most web services should not take more than 3 to 5 months from conception to launch:
First mover advantage gives the opportunity to define the new space and have competition compared to you.
There is no such thing as a unique idea. It is indeed highly probable that someone else has already thought about your wonderful web service, and is actually way ahead of you.
It forces you to focus on the key features of the service thus shortening development cycles.
Being perfect at launch is not only impossible and unnecessary but probably detrimental. The rule should be ship early, ship often since the service can be continuously updated and fixed.
The sooner something gets out there, the sooner it will start getting feedback from users. In a way, users could be seen as the most valuable asset of a web service if not the only one. They act as advertizers, providers of new feature ideas, quality testers and most of all help find out extremely quickly if the service is actually useful or not. But the price to pay to develop a strong base of passionate users is the high level of customer support responsiveness required.
Final point, launching quickly probably doesn't require a lot of money and ressources, thus avoiding an heavy and disturbing fundraising process happening too early in the company's life cycle.
But other could argue that Stealth mode is the way to go because :
Even though first mover advantage is important, there are many advantages to be follower when it requires heavy infrastructure investment. As an example Google was not the first search tool in the market.
Entrepreneurs stay in Stealth mode sometimes not so much because they think their idea is unique but rather because they think there is no need to prematurely advertize.
Launching early with the key functionality of the site carries the risk of not reaching an acceptable quality level.
Shipping early and often is great but doesn't necessarely means ship wide. Opening can be progressive with a viral approach from a predetermined and limited list of early testers. Thus avoiding to upset many people not ready to handle bugs and a too minimal level of features.
Feedback from users can be obtained without exiting strealth prematurely.

I leave it up to you to favor or not the Stealth mode vs Open approach from a start-up standpoint. As you may have guessed, i would rather recommend to go Open mode but with the difference of a progressive launch such as Joost when it come to opening it to testers and users.

European internationalisation models for Web 2.0 U.S. start-ups

I spent the week of march 5th in the Silicon Valley meeting about 10 companies and start-ups, thanks to the SF Orange Lab team support. Among them, we met successful ones in the area of Social networking, Virtual Worlds and other earlier stage projects realted to Music and e-commerce. I also met an "acceleration incubator" project aiming at helping French start-ups develop their business in the U.S. capitalising on the strong Silicon Valley ecosystem.
Beyond the cliché where we all think that U.S. start-ups have a unique way of developing their business in Europe through a first implementation in the U.K., it has been interesting to see how some of them have different european expansion strategies.
One of them is planning for instance to start from scratch an local subsidiary on a country by country basis: the idea is to use the "code" and the Brand of the mother company and then create a local legal entity with a local marketing team owning a share of it. It almost sounds like a franchising approach. The assumption here being that a local motivated team will have more chances to quickly start the take off of a local community of users and the implementation of local partnerships with Telco operators and industry players.
Another one in the same area is more relying on stronger focus on technology and in house knowledge of Telco mobile operators messaging systems (sms, mms) to ease connectivity with Telcos technical platforms. Thus making it possible to define mobile deployment strategies at Corporate level with their telco partners and accelerate then implementation at local level.
Another is more counting on leveraging their local early adopter user communities (French, Spanish, Italian..) from a US based community management team providing online dedicated support for service, technical and networking.
Finally others are aware of a time to market issue that they are already facing with their existing ressources within the US. They know it would take them more than 6 months or a year to define and implement a strong European strategy. Therefore they are keen to almost "outsource" to a powerful European Partner (like Orange) the management of their European local presence and developments.
Let's also emphasize that some of them raised funds from VCs to specifically accelerate their European development.
It is obvious that there is not one single way for a US start-up to develop itself in Europe and there shouldn't be one standardized way either for Orange to consider Partnerships with them.