Online Products & Customer Development [video]

Serial Entrepreneur Steve Blank’s Stanford Lecture

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internet-pc-screen-growth

Steve Blank is a retired serial entrepreneur who has helped found 8 internet startups in Silicon Valley, and has a number of internet success stories behind him.

NOTE: THE VIDEO WILL AUTOPLAY

In this series of videos he discusses his Customer Development model for companies in their early stage. Munchweb shares the belief with Steve that building a successful internet company is not a hit and miss art form, but something that can be achieved and managed through best practices.

In other words, listen to what Steve has to say and put it into action as it will drastically improve your chance of success with your internet start-up. While the video focuses on the idea of having a product, it really applies to any business since every business has a product in some form. A blog for example, has it’s product within its content, and the content must live up to its audiences wants, needs & desires.

Sorry about the autoplay but it was the only way to embed all the videos together. Enjoy!

[Source: Stanford University]

The Tipping Point [Comic]

Pushing an Online Business to Gain Momentum

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Building an online business takes time and you have to push through that difficult start to gain momentum. Don’t give in, the summit could be just over the brow of the hill. Click here if you want to shortcut your route to a successful online business.

Alex Tew = Website Business FAIL

OneMillionPeople.com & Pixels Don’t Work

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alex-tew-websites

You may have heard the story of Alex Tew who created a website that sold advertising on a homepage that consisted purely of ads. It was made up of one million pixels arranged in a 1000 × 1000 pixel grid. Alex sold ad space at $1 for a 10 × 10 block.

In reality such a website is normally pointless for both advertisers and users. However, due to the uniqueness of the idea and how Alex pitched the website as a way for him to pay for attending university, it caught the attention of the media. He got worldwide news coverage and in just over 4 months all the pixels were sold and he had made over $1,000,000 US.

Pure Genius or pure luck?

Well despite this instant success, Alex has failed multiple times since…

  • Pixelotto: Alex developed Pixelotto, a spin on the original Million Dollar Homepage idea, which failed to gain traction. People were given the chance to win $1 million by clicking the ads, but it failed to sell enough of the ad space to raise the prize money. It was received with criticism and described as a ‘tax on the stupid’.
  • PopJam: Alex then tried to create a real online business called PopJam, a social media humor site for text chatting with strangers, which despite angel funding also failed and was closed down.
  • SockandAwe: Third time unlucky, Alex created a game called Sock & Awe where you get to throw a shoe at George Bush. It’s purpose was to promote PopJam, and while it got excellent press coverage receiving over 4 million visitors in a matter of days (certainly an admirable achievement), it didn’t help get PopJam off the ground, did not make any money from advertising, ran up bandwidth expenses, and ultimately became such a distraction that Alex decided to quickly sell it for a measly £5000. While £5000 for a weeks work (minus expenses) is not bad, its a step back from the success of his original project which averaged somewhere around £5000 per day profit.
  • OneMillionPeople: 5 years after his original success, Alex then went on to create OneMillionPeople which was very similar to Million Dollar Homepage, just instead of pixel ads, it was photos of people. The aim was to sell spots for $3 and generate $3 million in revenue. That idea was quickly showing failure and was abandoned for free listings and the early buyers were refunded. Since the site offers nothing of real value and the Alex Tew novelty has long worn off, the site will again fail to gain traction.

Why So Many Failures?

Alex certainly has the entrepreneurial spirit and is continuing to try new ideas, which we can certainly commend him for. However, he needs to get a bit more inventive with his ideas and re-spark and channel his ability to drum up press like he did with the MillionDollarHomepage and ShockandAwe.

Alex has missed the essentials with each of his follow-up businesses. Since the Million Dollar Homepage each business has either:

  • Lacked a unique idea – Popjam was just ChatRoulette without the video, and Facebook chat but with strangers, and there is already plenty of chat rooms for chatting with strangers. Pixelotto & One Million Pages were just poop reinventions of the Million Dollar Homepage (I meant to write poor, but poop is a much better way to describe them).
  • Lacked a way to make money – Popjam didn’t really have any special ways of making money, nor could it be forseen too without a major change. While garnering mainstream use will eventually bring lots of money (think Twitter or Myspace), chatting with strangers was never destined to go mainstream. Facebook has become so successful at generating revenue because it gathers so much data from users which advertisers can use for precision targeted advertising campaigns. Popjam, even if it got off the ground, was never destined to make money. SockandAwe was also not monetized and missed out on some chunky advertising revenue, if it had managed just to secure a few banners totaling $5 eCPM then it would have generated at least $25,000 in that first week, and its sale price would have been considerably higher. It could have also been made to build an email list which would have been very valuable for promoting PopJam, or any future projects.
  • Lacked longevity – The Million Dollar Homepage, Pixelotto and One Million Faces all lacked longevity. Once all spots are gone, the business is over and you have to start all over. Gaining traction is not an option, and it is no surprise Alex has just lost so much traction by trying to reinvent his original idea twice over.
  • Lacked value for users - With the exception of PopJam all of Alex’s projects have lacked a true value for the end user, relieing on novelty, and as Alex has learned, novelty wears off fast.

Hopefully Alex has learned some valuable lessons through all of this, won’t die out a forgotten child star and has something worthwhile on the horizon. Or maybe he will burn through all his cash and end up back where he started.

He certainly has a talent for creating press and a good entrepreneurial spirit. He could just do with fine tuning it.

The Pivot, An Internet Start-up Strategy

Hiten Shah’s Online Business Presentation [Video]

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Many hugely successful start-ups have been through the Pivot. It is the art by which start-ups quickly adjust their focus in a new direction while maintaining momentum and building on the foundations they already have put in place.

Essentially it blocks out failure and breeds success for start-ups.

In this video Hiten Shah, co-founder of successful internet businesses KissMetrics and CrazyEgg, discusses how successful internet companies like YouTube, PayPal and even Facebook have utilized the pivot.

Eric Ries describes the Pivot as “the idea that successful startups change directions but stay grounded in what they’ve learned“.

Have you used the Pivot in your own business successfully? If so leave a comment and share your story…

Making Money Online Economy Driven by Stock Market

A Boom Ahead?

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A large number of social trends are closely tied in with the stock market and the economy. From short skirts being a sign of booming economies, to widespread disdain towards politicians in tough times, the world around us is closely linked to movements in the stock market.

Is it any surprise the economic boom of the sixties was swinging with leggy women? The late booming 1990s were just as full of long legs. It is really no surprise George Bush was pretty much universally and people could not wait to see the back of hum as stocks crashed through 2008.

No arm of society really escapes this phenomenon of stocks correlating social trends, and the online business world is no different.

Interest in making money online is one trend that appears to be swinging with the stock market turns.

The graph below shows how there has been more searches for the phrase ‘make money online’ in Google as the Dow Jones stock market has been dropping, and vice-versa.

make money online vs dow jones stock market

(data from Google Insights, annotation by Munchweb.com. Right axis shows price of the Dow Jones index)

Really this makes complete sense. When the stock market drops, the economy soon suffers, credit tightens, people have less money and jobs are lost. More people will look to alternative ways to make money like finding ways to earn money online.

Just a couple of quick notes:

  1. The internet is still a growing industry, so any downward movement in searches for making money online will likely be less than any upward movement, as there will be an underlying bias towards growth.
  2. We also could not expect the trend to match up perfectly in sync as short term events and news could create up or downward swings, although the overall link is still intact and visible over the longer term.

The graph above does match up to those two assumptions.

Where Next? Is Making Money Online Set to Boom?

Which direction stocks turn next should dictate whether interest in making money online will grow or decline. At the time of writing (early October 2010) several reliable future indicators of the stock market are strongly aligned to suggest a fall in stocks should happen soon, and such a fall should be at least a relatively large size (at the absolute least a 2000 point drop in the Dow).

It is not impossible for such indicators to remain at an extreme for a long time, but it does indicate that a downward trend in stocks is very likely on the horizon at some point, which will also see the economy resume a downward trend.

I prefer to leave stock market speculation to the experts, but should such a scenario play out, based on what else we know about larger social mood patterns and trends associated with a decline in stocks, when it comes to interest in making money online we can expect:

  • Interest in making money online to reach new peaks as people are faced with more difficult financial situations turn to alternative sources of revenue.
  • Interest will not peak until stock markets have bottomed. The peak will possibly come after the stock market bottom due to the delayed echo of damage that follows a fall in stocks. While the economy remains depressed interest in making money online will likely remain high.
  • With people desperately looking for quick and easy money spam will increase. This trend has already started.
  • The scam teachers of internet marketing will see a boom in clientele as more people desperate to make money buy their courses and products. Greed will drive more questionable marketing tactics and misleading sales pitches from unethical internet marketers.
  • Hatred for scammers and unethical internet marketers will increase both as a result, and also due to the need to find an enemy and assign blame that accompanies a downturn. A general distrust against internet marketers as a whole will grow considerably and the industry will be largely tarnished leaving the ethical members of the internet industry tarred with the same brush.
  • A boom in spam and scammers and a growth of hatred towards internet marketers will drive more rules and legislation on the internet business community.
  • A growth in communities (such as The Salty Droid) that name and shame online scammers and serve to protect people online will grow in terms of followers and aggression.
  • Record fines and punishments against online scammers and spammers will be delivered. While scammers and spammers have had somewhat of an easy ride during the boom times, they will eventually become a hated target if stocks drop far enough.
  • Competition will increase in the field of simple one-man online businesses while the struggling economy hampers the amount of money and ad revenue being spent online. Generally it will be a more difficult time for people new to the online industry to get started.
  • There will be a large growth in the available work-force for online work such as content writing and data entry. This will put downward pressure on wages for such positions. Companies such as Demand Media (aka eHow.com) and Mahalo that produce large farms of content online using cheap freelancers will continue to flourish and ultimately take market share from traditional media outlets.
  • Fewer people will produce online content simply for fun and fame. Community driven sites like Wikipedia and YouTube will see the rate of contributions decrease, and the rate of spam or made-for-marketing content increase.

While this is just fun (and hopefully insightful) speculation on the future, such trends completely depend on the stock market falling, and the severity of such trends greatly depends on how far stocks actually fall.

Where do you think the internet industry is heading?

Companies Started in Recessions & Depressions

Proof of Successful Businesses During Economic Downturns

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Despite conventional wisdom, recessions and depressions create opportunities for new businesses and entrepreneurs.

Here are a number of well know companies that got started during economic hardship:

Procter & Gambleprocter & gamble logo

Industry: Household products & cosmetics

Founded: The Panic of 1837

Procter & Gamble started with selling candles and grew as a multimillion dollar company. It is behind a number of household name products like Ariel, Head & Shoulders, Pantene, Tide and many more. P&G has a record of doing well through recessions and depressions, continuing to spend on advertising during tough times when others cut back. It has worked as they have created an empire dominating the beauty, healthcare and household care market.

IBMibm logo

Industry: Computers

Founded: The Long Depression, 1873-1896

IBM started out with punch card machines in the midst of a lingering depression. When the Great Depression hit, IBM hired new employees, continued growing operations and building inventory.

Initially christened as Tabulating Machine Company, it grew as International Business Machine becoming, at one time, the 4th largest technology company and the 2nd most valuable brand in the world.

General Electricgeneral electric logo

Industry: Energy and consumer electronics

Founded: Panic of 1873

Famed American inventor Thomas Edison founded the company by aligning many of his interests under Edison General Electric. Later in 1892 it merged with Thomson-Housten Company and as a result General Electric was formed. It has come a long way and is excelling in infrastructure, media, finance, healthcare, information and entertainment and environmental technologies.

General Motorsgeneral motors logo

Industry: Automobiles

Founded: The Panic of 1907

General Motors started as a holding company of Buick. The founder William Durant saw the opportunity when everyone else was frozen in fear of the economic downturn. He proceeded to buy small car builders and eventually General Motors created history as the undisputed leader in automobile manufacturing from 1931 to 2008. Unfortunately the company lost it’s strong routes and became more focused on financial wizardry than making cars, which ultimately led to its downturn which was made famous when it was bailed out by the U.S government in 2008.

United Technologies Corporationunited technologies corporation logo

Industry: Aerospace

Founded: In 1929, amid the Great Depression

Founded as the United Aircraft and Transport Corporation, it was renamed to United Technologies Corporation in 1975. Its business units consists Carrier, Hamilton Sundstrand, Otis, Pratt & Whitney, Sikorsky Aircraft, UTC Fire & Security and UTC Power. It’s the largest conglomerate in the United States and a major military contractor.

FedExfedex logo

Industry: Shipping

Founded: The Oil Crisis of 1973

The idea for FedEx came from an assignment Frederick Smith wrote while an undergraduate at Yale about how the mail delivery companies of the day were inefficiently using the passenger air routes for package delivery. Originally called FDX Corp., it became FedEx Corp. in January 1998 with the acquisition of Caliber System Inc. It diversified from an express delivery service to FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, FedEx Custom Critical, FedEx Trade Networks and FedEx Services.

Hyatt Corporationhyatt corporation logo

Industry: Hospitality
Founded: Economic Recession 1957-58

Hyatt Hotels Corporation opened its first hotel’s doors at the Los Angeles International Airport during the Eisenhower recession (1957 to 1958). It came into limelight after opening the Hyatt Regency Atlanta, world’s first atrium hotel. Starting from buying the Hyatt House it grew into major Hotels chains around the world.

IHOP Corporationihop corporation logo

Industry: Restaurants
Founded: Economic Recession 1958

International House of Pancakes is another star from the Eisenhower recession. The first IHOP restaurant opened in 1958 in Toluca Lake, California. The chain has almost 1500 restaurants in all the 50 states of United States serving more than 700m pancakes every year.

Microsoft Corporationmicrosoft corporation logo

Industry: Software
Founded: Panic of 1975

Microsoft Corporation wasn’t always the jaw-dropping enterprise it is today. In 1975, amidst a period of long economic uncertainty, it was created by Harvard University dropout Bill Gates, the computer industry scenario was totally different. However, Microsoft set the ball rolling by licensing MS Dos to IBM.

CNNcnn logo

Industry: Cable News
Founded: Panic of 1980

CNN might be a news giant now, but in recession-plagued 1980, it was a little-known station called The Cable Network News founded by Ted Turner. With its launch on 1st June, 1980, it has expanded to 42 bureaus around the world with more than 900 affiliates. CNN raised to fame after the coverage of the Gulf War.

MTV Networksmtv networks logo

Industry: Music Channel
Founded: Panic of 1981

MTV brought something new and different to the music scene when it debuted in the economic slump of 1981. MTV was established by Warner Amex Satellite Entertainment Company (WASEC) after extensive marketing research. The channel confirms the concept of cable niche programming and has become a symbol of youth culture. MTV has been around controversies for a long time but it has changed the way music is marketed.

Sports Illustratedsports illustrated logo

Industry: Sports magazine
Founded: 1954

The first issue of Sports Illustrated magazine was launched on August 16, 1954, at the tail-end of a recession. For the first 12 years it didn’t made profit. Though the start for Sports Illustrated was not very smooth, it held its ground and today has more than 3million subscribers. Sports Illustrated is known for many innovations in the sports magazine world including the liberal use of color photographs.

Hewlett-Packardhewlett-packard logo

Industry: Information Technology
Founded: 1939

Founded by Bill Hewlett and Dave Packard, Hewlett-Packard was inauspiciously born in a Palo Alto garage at the end of the Great Depression. Initial years were not very fruitful, but HP grew as a major brand in providing computer systems, peripherals, software, IT consulting & services. Their first product was an audio oscillator and one of their first customers was Walt Disney. Disney used the oscillator to test audio equipment in the 12 specially equipped theaters showing Fantasia in 1940

Online Businesses Successful Through Recessions

The bursting of the internet bubble damaged companies throughout the online industry as we entered the new millenium. However, many companies that were very young at the time powered through to continue success many years later. These include Google, Travelocity, PayPal, eBay, Amazon and Priceline. Even Skype which was founded in 2003 during the aftermath of the dot-com boom at a very difficult time for online start-ups, managed to grow rapidly.

Early in the economic plummet that started after stocks topped in 2007, many existing and relatively new players in the online industry continued to be successful. The online sector suffered a lot less than other industries partly because any malinvestment had been significantly reduced in the dot-com bubble aftermath. Investors in online companies have been more sensible as a result of the earlier troubles for internet companies.

While many online companies will no doubt struggle with a strife economy, there will still be plenty of opportunity in this still young and evolving industry. The shake-up provided by economic uncertainty will no doubt open new doors for the savvy entrepreneur.

Entrepreneurs in Recessions & Depressions

Business Opportunity During Economic Downturns

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Recessions and depressions are always accompanied with reluctance towards new business opportunities. Society becomes focused on cutting back and trying to ensure financial survival.

However, as the crowd moves to the extreme in one direction the smart entrepreneur and investor dances to a different beat.


  • Just as most investors are buying stocks like crazy just before a big crash…
  • Just as everyone is piling up debt to buy an overpriced house just before the housing bubble bursts…
  • And just like nobody was buying gold back in 1999 just before it increased 400% in value over the next decade…

The crowd usually gets it wrong.

While spotting the important turning points is hugely difficult, it is safe to say when it comes to predicting future trends the majority of people screw up at the worst time to screw up.

When it comes to making decisions based on future trends, doing what everyone else is doing is rarely the right idea. It might work out for a short time, but usually ends up going wrong soon enough.

Going against the conventional wisdom when it comes to future trends, however short lived it might be, is difficult to do. It’s hard to ignore the millions of voices chanting the same conventional ‘wisdom’. But the more people chanting it, the more likely it is wrong.

Conventional wisdom tells most entrepreneurs and investors to avoid new businesses in a recession. The worse the recession gets and the longer it lingers, the more that idea becomes entrenched.

Starting or growing a business in a downturn is certainly not easy, far from it, that conventional wisdom is certainly coming from somewhere.

Investment is scarce, consumers are spending less, and taxes and regulations are on the rise. No wonder everyone thinks its a bad time to start a business.

But is it really?

There’s a Shake-Up of Opportunity, A Shift of Power

A downturn changes the playing field. What was once normal begins to change rapidly. Companies that got comfortable like a retired grandad in his chair, aren’t so fast at moving when the fire starts.

People’s demands and interests begin to change drastically. Notice how darker themed, and often violent shows are now quickly becoming hits on TV, leaving the happy go lucky comedies of the 90s a distant memory?

The downturn is also chopping away at the once sturdy legs of the traditional media industry. Ad revenues, the lifeblood of traditional media, are dropping and power is shifting to the independent publisher. Those bloggers and independant websites have lower costs, strong niche expertise, the ability to attract higher paying niche advertisers, and usually more inventive ways to make money like affiliate marketing and paid memberships.

Wealth tends not to be destroyed, but instead it just changes hands.


  • When companies are going out of business
  • When new competition is struggling to come into existence
  • When talented people that were previously off the job market have now lost their jobs
  • When less companies are advertising and advertising costs are cheaper
  • When people’s interests and buying habits have shifted

…there lies opportunity.

It’s certainly not going to be easy, but the smart and determined entrepreneur can build a growing and successful business during an economic downturn.

Such new innovative companies are key to softening the blow of the downturn and providing new opportunities for jobs and growth. The survivors and emerging business from the economic embers will pave the way for recovery. They are the future.

Take a look at a list of well known companies that started during economic downturns.

The Rocky Story by Tony Robbins

Sylvester Stallone’s Lesson for Entrepreneurs

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How Sylvester Stallone went from a dead broke unsuccessful actor, to be the lead role in his own blockbuster hit.

An important lesson for wannabe entrepreneurs, and really for anyone looking to achieve anything.