Google's Forum Search initiative

(This post is a little bit of self promotion about Twing.com, the product I currently GM)

So, Google is now allowing users to search across forums outside the Google Groups platform. When we started to build the vision of Twing back in late 2006, one of the questions that arose during the business validation and competitive analysis processes was "If Google entered the market, what would happen to Twing?". Of course, when you consider an 800 lb. gorilla like Google entering your space, there is always pause.

However, while your business could be greatly damaged by such a situation, there is also opportunity. One of the challenges we faced at Twing was mainstream awareness of "cross forum search". Yes, it is true that more than 25% of the U.S. internet population uses online discussion forums. However, mainstream awareness about the benefits of this content is limited. Users tend to not understand the differences between different collection types.

In our case the comparison is simply between standard web results and discussion content found in forums. Online forum content is also very different from blogs (in their current mainstream form). We refer to forums as places where many to many discussions take place, or groups speaking amongst themselves. Blogs are usually individuals or entities that post broadcasts to other users. Blog comments can be referred to as discussions of sorts, but they are not the same as forums, in general.

Back to the point. Since awareness about our benefits was always a challenge, we viewed an entry from a major player (Google, Yahoo, Microsoft, Ask) as an opportunity to generate awareness. For example, if they implemented functionality that replicated ours, they would drive mainstream users to the product. Those (now converted believers in forum content) are possible users of Twing.

Oh, and there is one other reason it's not all bad Google is getting into our space. It helps justify our belief that this is a growing opportunity, not something of the past.

Now that you have a little insight into our positive way of thinking at Twing, I need to get back to figuring out how to battle the fully armed cruiser on my tail doing 40 knots! (Thanks for the analogy Scott)

Anyway, since you read all the way through this blog post (thank you), have a look at Twing if you are interested in searching forums and online discussions. We think we have done a pretty good job.

Kevin Shea

Financial Markets hitting bottom..time to plan and build!!

Whether or not the market has hit the bottom, now is an excellent opportunity to begin building your new internet-based startup. If you have cash, and time to plan and build, and were waiting for a good time to start, your opportunity has arrived. This is my opinion, of course, but let me tell you why.

The most important prerequisites are available time and money. In a way, this reminds me of an old (70's) joke Steve Martin used to tell in his standup acts: "How to make a million dollars and never pay taxes. First, get a million dollars (said simply). Then, when the taxman comes around to collect, you just tell him that you just forgot to pay your taxes." It's a joke, of course, but you need the money to operate your business during planning and development. You also need to have time, which can be significantly assisted by having sufficient finances.

Ok, so let's assume you have money lined up (not an easy feat in this market), or you can build with your own cash. Other people in my industry are touting the cost savings opportunities as the primary reason for starting now. I agree this is a great opportunity to save money on hardware, networking and people costs. Additionally, business operating costs like commercial rent are also looking good right now. However, imo, this is not the most powerful driver.

Our economy (and the world, for that matter) runs in cycles. If you believe we will be coming out of our recent downturn by the end of 2009 or early 2010, it makes sense to look at your future product and it's lifecycle. This is an area that most make mistakes.

While I have seen complex projects developed and launched in 6 - 9 months, the average is usually more like 12 - 15 months. Based on the assumption that your project falls into this timeframe, if you started today your launch would be in the last quarter of 2009 or the first quarter of 2010. You would be launching at the beginning of a positive upturn in the market, as opposed to the end of one. VC/Angel/IPO/M&A interest will improve and investors will be hungry to take advantage of an upswing.

Most successful internet products are technologically complex. If not, barriers to competition are lower and investors will see this as a risk. I would see it this way. This is not to say your idea can't be a simple one that is overlooked in the marketplace. However, if you get traction, people will jump at the chance to beat you at your own game. The easier that is, the more risky your business.

The question that will be asked is "If someone wanted to compete with you, how long would it take to get to your stage of maturity?". Also, "How much would it cost?" If the answers are that it would not take long and cost very little, you might want to reconsider what you are planning. A good answer to these questions would be something like "We decided to get into this product because there is a market need, it's not easy to build and a competitor would need significantly more than a few servers a a couple of programmers to get to our level."

Why do entrepreneurs make mistakes estimating time to market?

1. Hiring the right people takes time. Even in an employers market, it is a consuming process. You should also expect that one or more of your most important hires will not work out for some reason and you will need to rehire/retrain.
2. Building detailed product specifications is often overlooked as a potential bump. A product spec document should read like a fluent roadmap for all members of your team, right down to the person writing the code. Even when you think they are complete from the business perspective, you will likely need to be revised many times to reflect the necessary ongoing feedback from technology.
3. And finally, writing and testing the code will have its own bumps along the way. Even if business and technology agree on the feasibility of some aspect of your product, you will likely find some part(s) that won't work within your capabilities or budgeting constraints.

Don't get me wrong. As I've stated earlier, concept to live product can happen quickly. However, banking on it could be a big mistake.

Back to the original point. If 12 - 15 months is what it takes to get your product live...do the math and look at the calendar. Fifteen months from now is January 2010. What will the financial world be like then?

IMO, It's time to start!

Kevin

Shanghai business locations: Pudong or Puxi

If you are considering opening up an office in China, location is important. First, let me state that if you are still considering a major city location, tech startups would have the best opportunities for talent in Beijing, not Shanghai.

That being said, my experience running an office has been in Shanghai. This was a decision that was made prior to me taking over the operations. So, I'm here to give you some advice about Shanghai in particular.

Shanghai is a massive metropolitan area. The last figures I heard was that there were some 20 million people in the city. It has an almost intimidating city landscape with tall buildings as far as the eye can see. You can get a great view of this from the top of the Jin Mao Tower (Pudong). I highly recommend a visit there if you get a chance.

There are two primary business centers of Shanghai: Puxi, to the west of the Huangpu River and Pudong to the east. While geographically different, I compare the two areas to Manhattan. Puxi is like midtown and Pudong is very much like the financial district...downtown. The Shanghai Stock Exchange is also located in Pudong. Our office has a great view of the Exchange, so I know the area fairly well.

Pudong is a booming construction zone. Two of the largest skyscrapers in the world (the Jin Mao and Shanghai World Financial Center) are right next to each other. Commercial rents in Pudong are generally higher than Puxi, primarily because the area is being promoted as a major financial hub and the newness of most of the office buildings. However, most people who work in the area live in Puxi or further outside the district of Pudong.

Puxi is considered the city center. It has a booming nightlife and plenty of restaurants and shopping. Also, if it matters to you, most "Expats" are located in the Puxi area. It's also closer to the Hongqiao Airport. Normally, if you are coming from Hongqiao, you are driving through Puxi to get to Pudong. Commercial rents in Puxi are much more flexible in price and generally 20% or more lower than Pudong.

There is plenty more to say about each area. They both have their own appeal. However, I would recommend any startup looking to start in Shanghai to begin operations in the Puxi district.

If you want to tap me for more info about setting up your location in Shanghai, send me an email and I'll share what I know.

Good luck!

Kevin

Doing Business in China: A startup's perspective (part 1)

So you have an interesting internet focused product, service or idea. Now you begin, or continue, conducting market analysis studies of where you should do business to get the biggest return on your investment (or any return, for that matter).

There is no doubt at some point you will see China as an opportunistic geography. Why? Well you can find quite a few reports that project internet usage in China surpassing the U.S., if it hasn't already. On the surface, this seems logical since China has approximately 1.3 Billion people with an emerging economy and a rising currency.

Let's just assume, for the sake of keeping this post on focus, that your business offering has legitimate potential in the Chinese market. (Since this is a multi-part blog post, I am going to focus on the challenges irrespective of the potential of your product or service. I will discuss product/service challenges in China in a following post.) All you have to do is produce a Chinese language interface and you're off to the races, right? Not so fast my friend!

The first thing you should ask yourself is "should I consider putting my servers inside mainland China?" The reason you should ask yourself that is this: If your servers are outside mainland China, and the great internet wall does not like your content for any reason, they will block you. Trust me, getting unblocked in a reasonable period of time is virtually impossible.

Ok, you say you want to put your servers inside China to avoid latency and the digital wall. Not so fast Mr. Entrepreneur! Having your business run out of China isn't so simple. First, you will need what's called an ICP Licence (Internet Content Provider). This license allows you to have a website conducting business within the jurisdiction of mainland China.

Headache number X: getting an ICP License requires you to be a company with majority ownership by Chinese nationals. There are several methods to accomplish this, but none are easy. One method is to purchase an existing shell company that has an ICP license and maintaining that company as a subsidiary. That sounds easy. It's just a matter of money, right? Once again...not easy. You as a non-Chinese entity can't own a company that has the ICP license. In order to accomplish this, you must find at least 2 Chinese nationals that you trust (good luck) to be the shareholders of this company. You then develop contractual relationships with those individuals that, in essence, give you a "controlling interest" in the entity holding the ICP license.

If you have made it this far, things are only going to get more volatile...sorry.

So, you have your contracts in place, you have entrusted (and likely paid a fee to) two Chinese nationals to keep your operating (ICP) license working for you. Here is the point of this post (finally): Everything in Chinese business is an opportunity to negotiate. The individuals you have entrusted, and even have contracts restricting them from doing anything with the licenses without your consent, can (and in my case have) take this as an opportunity to gain additional compensation.

Doesn't this sound like fun? ;-)

I'm going to wrap this up in order to keep on target. The point is that doing business in China is not simple. The laws are fuzzy and you can, and likely will be taken advantage of during this process.

My recommendation is that you make it in the best interest of your "trusted" assignees to continue to be cooperative and dedicated to the success of your company. Instead of all cash, give your "icp holders" additional incentive like equity or the ability to gain it. This will give you a much better chance for success.

Oh, and don't forget to have people from the home office on the ground 24/7. Your "trust" issues don't stop with licensing and assignment. There are MANY other areas you will be at risk during your daily operations.

I will keep my posts on doing business in China going. My experience in the past year has taught me many lessons. They were not all bad.

Kevin Shea

And it begins...

It's funny, I was thinking about when I first started to produce a "blogs". My first blogs were what I called "webLOGS". The blog itself consisted of exactly what it said: a log of my web activities and changes to the site so users to get to the most updated info quickly. Man, have things changed in the past 10 or so years!

Anyway, that's the past and this is the present. My recent blog posts have really only targeted my personal interest of fishing. And frankly, most lack significant content.

However, being in the online industry since the early-mid 90's gives me an interesting perspective. Additionally, I've been involved on some WILD rides with various startups. So, I've decided to put my own $.02 into the mix.

This blog will be irregular at best, at least early on. My topics will be covering areas of my professional life that have impacted me most: startups, china, online marketing, managing people, usability, search, and my opinions on all of this and more.

I'm not one to hold back much, so this could be interesting reading for a few :-)

Stay tuned for more...

Kevin