3 Important Internet Business Concepts

I’m currently fully graduated from university and spending quite a bit of time working on a few internet startup concepts – I’ve been speaking to mentors, reading up and learning about business model analysis and really trying to throughly analyse my models. Going through this entire process has made me really thankful of some insights that I have gleaned as a result of my experience with internet startups – both through interning at one, as well as through my observation of them over the past few years. (:

Here are just a few crucial concepts that in my opinion, are fundamentally important in making an internet-based-business succeed.

What I've learnt so far!

What I've learnt so far!

1. You have to be the very best at what you do.

It’s a misconception that internet businesses don’t require much work. I’ve talked to tons of people who are of the opinion that you can just set up a website to sell stuff online and just expect to generate sales without too much effort. That’s extremely unlikely to happen.

A mentor of mine once told me that money on the internet is probably much harder to make as compared to traditional brick and mortar businesses. He is right in many ways on that.

What the internet does is that it makes the world much smaller. A small sundry mart in a small Asian suburb does not have to necessarily compete with a gigantic Wal-Mart in the USA, but an internet startup has to battle with the biggest and strongest players out there from the very beginning! There’s no such thing as comfortable protectionist policies out there on the global internet!

Only the most outstanding players survive, and hence, Zipf’s law, that states that the number one in a field will be way disproportionately more popular than the second ranked player in the field, is amplified on the online arena! On the internet, if you’re not the best, the rapid pace of innovation will just leave you forgotten in the dust.

For those of you more into math (:

For those of you more into math (:

If you ever want to start up an online business, do take a feather out of Pokemon’s Ash Ketchum’s hat and focus on being the very best and strive to be the very best. In the hypercompetitive arena of the internet, there’s no place for #2 or #3.

(always worth listening to every now and then :P )

Speaking of being forgotten…

2. On the internet, Mindshare is necessary for survival.

Quick question – what do ¬†you think separates Groupon from the millions of other clones out there? In my opinion it definitely isn’t the system, service or business model but rather the mindshare that Groupon possesses. People know and remember Groupon, not the thousands of other clones out there, and with a limited bookmark bar in your browser (as well as a limited attention span) people naturally will only use the service which stands out in their memory!

Hence, Mindshare is a crucially important asset for most online business models and if you can observe existing online businesses such as job and property portals, you can see that due to the large amount of competition in the field and low barriers to entry, players have found themselves having to shell out large amount of advertising expenditure to stay competitive. If you are ever in doubt of that, do keep a lookout for Jobstreet and Property Guru ads all around, I’ve seen them all over Singapore AND Kuala Lumpur!

One important implication of this is that competing with established players can be costly, sometimes more so than with a brick and mortar business model. So what do new entrants to the market (like me) have to do? We have to jolly well be creative and create a blue ocean (go check out Blue Ocean Strategy,¬†awesome book) ! That’s why it’s so vital to come up with something new, different and creative that people can remember!

A novel fresh take on a business model makes it so much easier to earn the Mindshare necessary to succeed in this field at a minimal cost. But then again, a fresh take on a business model does not necessarily have to be a completely new one…

3. Radical simplicity really matters.

… it could be that all it takes is that your model is a much simpler and improved version of an older business model!

Look at Friendster vs Facebook, Wuala vs Dropbox and so many more examples out there! Those newer models gained so much more ground because they were so much easier to use with just a few key differentiating features but otherwise very similar to the older models! Facebook’s clean simple interface and Dropbox’s remarkable desktop and mobile integration were key to having the possibly not so tech-savvy masses – the vast majority of users out there.

The adoption curve

The adoption curve - the money's clearly in the centre!

To court them, you have to be very, very, very easy to use. There is no too easy to use here! Hence, do try to make radical simplicity a part of your internet startup if you’re working on one too!

Send me feedback and your opinions!

These are just a couple of my thoughts and I really welcome feedback as I’m actually working on some internet business ideas and am always willing to learn more! Let me know what you think and what else you want to hear from me! Now that I’m unemployed and currently working on my startup plans, I’m dedicating Monday mornings to writing and keeping you guys updated on my journey through the exciting new frontiers of technopreneurship!

Alternatively, do send feedback to me at kevin (at) kevinc.net!

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