10 Entrepreneurial Lessons From the ‘Gang of Four’

Martin Zwilling , Founder and CEO , Startup Professionals

3 Mar 2013

Every startup, as well as mature business, needs to learn as much as possible from Amazon, Apple, Facebook, and Google, who have set the standards for fast growth and success in today’s business world. These companies, designated the “gang of four” by Eric Schmidt a couple of years ago, are clearly driving a consumer and business revolution on the Internet today.

According to many technology pundits, including Phil Simon, in his book “The Age of the Platform,” these four exemplify the rise of platforms with applications as a business model, rather than a single product or service. Whether you believe his conclusion or not, you can learn a lot from the lessons he offers on how to build a competitive business model today:

• Act small. “Bigness” and all of its attendant problems – bureaucracy, politics, infighting, and the like – put any business model at risk. Bureaucracy and excessive democracy kill speed. Shake organizations up often to avoid stiff and inflexible management structures.
• Be open and collaborative. Startups as well as large companies must be open to all sorts of new ventures, partnerships, and offerings. Make application programming interfaces (APIs) open and freely available to developers, partners, and consumers.
• Seek intelligent acquisitions, extensions, and directions. Plan on making strategic acquisitions to enhance your core competency, both in terms of depth and breadth. Leverage existing solutions and platforms for extensions, rather than re-invent the wheel.
• Make little bets and encourage experimentation. Growth companies in this age develop many different small projects and many ideas. To be sure, a majority will fail, but the most successful product launches often emanate from small ideas and side projects.
• Fail forward and embrace uncertainty. There’s nothing wrong with failing, if the bet is small, and you learn from it. Insisting on perfection before rollout hurts much more than it helps. To build a model, you have to be willing to take chances. Safe is the new risky.
• Temper expectations and overshoot on technology. Building an effective platform takes time, and is usually slow to show traction. Always buy more computer resources than you need. It’s better to have too much than not enough for a great first impression.
• Know when to punt. Many people and businesses stubbornly and mistakenly refuse to adapt to new economics, business realities, and technologies. No one wants to leave a great deal of money on the table, but don’t be penny-wise and pound foolish.
• Breadth trumps depth. True platforms are multi-faceted. Having significant depth in one niche area is important, but robust platforms evolve to add a bevy of products, without requiring existing users and customers to learn a new user interface or convert data.
• Move quickly and decisively when spotting a niche. Don’t confuse patience with inertia. Waiting too long means that an opportunity may disappear permanently – or someone else may beat you to the punch. Temper expectations, but make the bet.
• Use existing tools. It’s time consuming, expensive, and simply unnecessary for every company to create its own tools and base functions (planks) from scratch. By using outposts, businesses increase serendipity, exposure, and cross-pollination.

Building one of the new platforms definitely doesn’t assure business success. Skeptics may point out that platforms have been around since the advent of computers, in the form of operating systems, networks and APIs, yet today the new platforms are becoming table stakes. Businesses with primitive sites cost themselves credibility and customers, and risk becoming invisible to the world at large.

Just as important, the new platform business models can never be finished. Each must continue to expand in many ways and directions. Today’s dizzying pace of change shows no signs of abating. If anything, it is likely to accelerate. So do everything you can to heed these lessons today, to be as prepared as possible for a vastly different tomorrow.

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