I've spent the better part of the past 3 months immersed in the venture capital and start-up worlds (well, as immersed as one can be in Upstate NY).
This time has revealed something intriguing about what is considered valuable in today's current environment. In light of this week's upcoming Twitter IPO expect lots of talk about dotcom billionaires again and how the next great idea is probably lurking on some napkin at a dinner near you (the sketch up for twitter was reported done on a single sheet of paper).
Well, I'll save you the trouble and get you on your way to riches because I've figured out the common theme among all of the hottest consumer start-ups in the US right now.
Help your customer avoid talking to people. That's right take all human interaction out of a transaction and you might be on your way to internet billions.
Don't believe me? Consider the following -
Way, way back in the good old days you had to pick up a phone to call for a car service. For example, you'd dial 777-7777 to get your town car home from work. However, it today's "my phone is my companion" world, customers either can't or don't feel comfortable calling someone for a cab. OH, THE HUMANITY OF SPEAKING TO A HUMAN! Thus, Uber built an app for that and while they are currently private they are valued at north of a billion.
Or maybe you needed a dogwalker for Fido when you were heading to a conference this weekend. You could call up Sally Sitters Service but again you must formulate words with your mouth and OH THE HUMANITY!!! So, DogVacay is built and raises $22 million in less than a year (yes, they are just an app that lets you book a dogsitter).
Call a travel agent? Nope us Expedia, Hotwire, Priceline.....
Need to crash on a buddy's couch when travelling? AirBnB.
You get the point. I'm being a little overly simplistic in my analysis, but there is some merit to the point that as we have become more accustomed to electronic communication we've become less comfortable with traditional communication and the venture capital is flowing to these new methods of communication.
A note on twitter because it will be the talk of the town when they go public on Thursday.
A) The stock is hitting the absolute peak of frothiness in the market right now. The range is said to be $23-$25, but I expect they'll price it around $28 and it will quickly jump into the $30's or above.
B) The problem is that the untold story of twitter is that for all of its benefits, there are a tremendous number of inactive accounts and outright fake accounts. Twitter said up to 5% of accounts are fake but I've seen reports from twitter "marketing" people that would run 1,000,000 plus fake accounts by themselves! With just 250 million TOTAL accounts the idea that 1 guy running a marketing firm could control a million fake accounts should concern any investors. I suspect fake accounts are probably 20% of all accounts on twitter (roughly 1/2 of President Obama's followers were found to be fake) and another 30% of accounts are inactive. There are also a large number of users with multiple accounts but it's difficult to put number on these people.
C) The company introduced their new revenue model (Ads in the twitter stream) this week which is ...... wait for it .............. basically the exact same as AOL's revenue model in 1995 - banner ads.
However, a lot of people are going to get filthy rich on Thursday so get going on a way to automate your lawn service so that you get your grass mowed on demand and build an app for that so I don't have to talk to my landscaper again!