18 min read

Disruption and My Next Startup... You Help Decide

Disruption and My Next Startup... You Help Decide

**Dear people from Draper Fisher Jurveston (DFJ) who frequently visit this post (multiple times a week and close to 50 times total according to my analytics)-  You should say hi via email.  Nope, not looking for funding or to “pitch” you.   I just enjoy talking to smart people who want to change the world, which you guys and gals definitely like to do.**

What needs serious disrupting and can change the world?  This is my favorite conversation to have with fellow entrepreneurs / VCs / startup enthusiasts. After leaving Publictivity in January, I’ve spent a ton of time thinking about this topic in regards to what I’m passionate about and really want to start.  At some point you can’t do any more thinking, and you need to dive in head first.  I’m at that point, so I wrote everything down/synthesized from tons of documents.  I figured I’d share the list + notes with the world like I often do with my close friends to get feedback and then start building something.  Some may think I’ve shared more than I should in the post, but I don’t think so.  Ideas only get you so far, and getting true feedback is a lot more valuable to me than the rare off chance of someone “stealing” 1 of 12 ideas that I may or may not ever pursue.

Yes, I am looking for co-founders, but moreso people who are smart, passionate, and serious about one or more of the ideas here, along with having a skill that makes sense.  ie- Idea #1 would require someone who likes video games and understands the gaming market, whereas idea #3 really needs someone with a background in video. I don’t care if you’re technical in nature or business in nature, shoot me an email- j@jasonlbaptiste.com or call 772.801.1058 or Twitter if you want to chat.

There’s a poll at the end to Vote For A Concept

Concepts I find interesting and are in no specific order:

#1 -Mainstream Alternate Reality Gaming

Odds are you have no clue what alternate reality gaming is.  Here’s Wikipedia’s definition:

An alternate reality game (ARG), is an interactive narrative that uses the real world as a platform, often involving multiple media and game elements, to tell a story that may be affected by participants’ ideas or actions.

Examples include the Batman Dark knight campaign with citizens for Gotham reaching over ten million participants and the Halo “I Love Bees Campaign”.  Most ARGs are done as private label games or for promotional purposes.  No one has created the “Electronic Arts of ARGs”.  Your users don’t need to know what an ARG is, they just need to be compelled to play the game and participate.  Odds are they will, and ARGs are a huge opportunity in my mind due to the following trends that would drive a mainstream commercial ARG franchise and game development company:

Virtual Goods- You can make money off of micro transactions like none other.  Want to upgrade a power or gain a new clue?  Pay .99 cents.  Want to fend off another team? Pay .99 for “Weapon X”.

iPhone and Mobile Gaming- Mobile gaming by itself is a huge platform, but this would take it to a whole other level by combining it with the real world.  Your iPhone would be a companion app.  It would allow you to communicate with your team, purchase upgrades, keep track of the game, etc.

“Physical Game Interaction” ala the Wii–  The Wii changed things, and I’m assuming Project Natal by microsoft will do the same.  People want more than just holding a controller.  They want physical interaction.  ARGs take that to a whole other level by making you actually participate with the real world, not JUST a screen.  Throw in augmented reality for good measure and things get REALLY interesting.

Social Gaming–  Zynga is making a bundle.  People love playing games with their friends and forming bonds via MMOs like World of Warcraft.  You would bring that aspect in.  It would be more like Spymaster, as facebook and twitter would help spread the game and involve your friends.  ARGs are all about solving clues and tapping into your social networks would be a huge resource.

Games Are Movie Like Narratives- Super Mario brothers was just a game.  jump and grind it out, then save the princess.  There was zero depth to it.  Fast forward 20 years and Halo 3 is able to top all movies with 24 hour sales.  People want to attach themselves to video game characters and enjoy a story with it.  ARGs are the embodiment of story telling and narratives.  Not only do you increase engagement, you build a brand around your ARG.

CrashCorp is pretty stealth right now, but I suspect they’re up to something along these lines. They or a company like them may be this generation’s Nintendo or Electronic Arts.

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#2- A World Where Artists Don’t Need Record Labels

Amanda Palmer made $19,000 in 10 hours solely through Twitter.  The key here isn’t twitter, as it is just one tool, but it’s about directly engaging your fans and monetizing them without middle men (major labels). If you want to be the next U2, sure, you probably need a record label.  If you love music and want to make a living off of it, technology can allow you to do that through direct engagement with your fan base.  Trent Reznor says it best here:

If you don’t know anything about new media or how people communicate these days, none of this will work. The role of an independent musician these days requires a mastery of first hand use of these tools. If you don’t get it – find someone who does to do this for you.

Artists know how to make music, but not how to do technology for the most part.  Even if they do, odds are they don’t have the time or the level of expertise that you do.  Bundle that expertise together and help artists directly engage their fans (on their site, through social media, direct sales, viral videos,etc.).  The next equivalent of a “Record Label”, won’t look like Warner Music, but more like a technology company.  It will allow artists to double their cut and make their living without signing their souls away.

Even though I often disagree with the industry and the way Record Labels often work, it’s just as powerful to apply the same tactics to them.  Look at Soulja Boy, he has 1.3 million followers on Twitter alone.  Throw in email lists, facebook, saynow, ustream, and everything else.  Think about that, without radio or MTV, he could instantly engage millions of people who want to hear from him.  Through that engagement he could monetize the fan base and also analyze it- where they came from, who they are, etc.  This all seems like “well yeah duh material” if you’re a geek.  To the average Joe and music artists, it’s like Voodoo.

If I were to create a company that helped artists directly engage, analyze, and monetize their fan base I’d make it a combination of a hands on consultancy and a technology company that makes web apps to empower artists.  A good example of a company doing something similar to this is TopSpin Media.

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#3- Home Shopping Network 2.0

Online video is hard to monetize, but this one is different.  Create awesome content, that isn’t just “yet another video product review“.  ie- instead of reviewing the iPhone talk about the 10 best smart phones to get your Dad for father’s day.  If you can’t afford the product go to bestbuy, buy them, and return them once youre done.  Get creative.  Content is king here.  You wouldn’t need to livestream at first, as video content will just do.  Some basic rough calculations:

Video gets 50,000 views over 5 months.  1% of viewers buys the product.  In this case a $299 smart phone.  Amazon gives you 5% as a referral fee through their affiliate program.    On that one video you would make $7,475 aka a $149.50 CPM.  The amount of views you get can be a lot higher or a lot lower. It depends on the content, how popular you get,etc.  Eventually, companies will be approaching YOU.   Gary Vee feels the same way, so I’ll shut up and let you watch his video as it explains it very well:

This is pure hustle and pure passion with a lot of creativity thrown in.  If you have never been called crazy, eccentric, or passionate, this isn’t for you.  Maybe another way to look at this is:“Where is the Revision 3 of Shopping?”

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#4- The Textbook Publishing Industry

The textbook industry is literally called a broken market when it comes to economic theory.  Books cost too much for students, professors hate the content, and authors don’t see any money from re-sales.  A new age textbook company should have the following characteristics:

  1. 100% digital with the option to print and modify it as you like.
  2. Available online and all other formats known to man with zero DRM (iphone, kindle, PDF, other ereaders, mobile web format)
  3. A living document that is corrected frequently and also has continuous updates that interject current events.
  4. Enriched by video.  It’s undoubtedly helps people learn better, especially with hands on subjects like computer science.
  5. Content that doesn’t suck.  Kids won’t learn with using the “Widgets example” 100x over.  Make it simple and make it up to date with current events.
  6. Make it  social.  Why can’t I interact with student x from Stanford while I’m at UNC?  Why can’t I see the questions asked by all students with the book on Problem Set #8 ? Make textbooks Facebook Connect enabled.
  7. Make it a platform.  Let teachers remix the content and fit their lesson plans.  Even let people develop apps upon the content and subject manner.  Learning ruby on rails?  Someone should be able to plug in a simple app that helps you learn code. Exactly like this.

The elevator pitch is this:  Do to educational publishing what new media has and is doing to traditional media.

To update a traditional textbook you usually need to do the following:

  1. Isolate all the minor changes and go through tons of committees to publish them.
  2. Wait till enough are there to print a new edition.
  3. Spend tens of thousands of dollars to print this new edition.
  4. Spend more money marketing it to colleges and piss off those who just bought the previous edition
  5. Waste more money creating silly value adds like CD-Roms, so you can justify a new edition.
  6. Be irrelevant by the time it gets printed.

Cost: Lots of money Time: Lots Value: None.

To update a textbook of the future:

  1. Open WordPress/Custom built CMS to manage the content
  2. Make correction and its updated immediately.

Cost: None Time: under 5 minutes Value: Incremental and immediate.

You need to choose wisely where to start here.  Don’t go after k-12 markets and bureaucracy.  Start with home schooling or start with niche subjects.  Build up properties one by one and eventually you may be able to take on the major publishers in large markets.  California is open to change, and I assume that most other states will be, especially if you build a great track record + can show how it can reduce costs for them.  Here’s a great primer on why the textbook industry is a pain in the ass and needs disrupting.

Vote For This Concept

#5- Online Local News

The print form of a newspaper is dying, but journalism surely isn’t.

The local newspaper has two jobs:

  1. Connect the community with local news and content that is of importance.
  2. Connect local businesses with the local community.

There are two ways to approach this:

Create the content yourself like a real newspaper. This is more capital intensive, but it can give you a chance to shine when it comes to content and having something unique. Mix it in with social interaction and bringing community together.  You can syndicate some content from local blogs.  You can’t compete with a local print newspaper when it comes to printing dead trees, but why would you want to? Instead get a leg up and go after where they are weaker, and are transitioning to: online. Example- My hometown local paper the bergen record has 170k subscribers for the print version. Their online version is at northjersey.com and has approximately 300k unique visitors a month.  Their site is terrible, the content is stale, and you could easily attack them on this front.  Let them bleed money due to their dead tree revenues, languish with a poor online strategy, and dominate them by focusing solely on the online portion.  The problem is scaling this business to a national level.  You would eventually need a lot of capital and there’s no guarantee success in Market A will translate to Market B.  This is not a business to go after for the easy hearted or those looking for a “quick flip”.  On the flipside, you could build the next great media company.  Two great examples of companies doing this well:

Patch.com (just acquired by AOL) and pegasusnews.com .

2- Create an aggregator.  People are already putting local news online.  Take that content, aggregate it, and make it highly searchable.  Everyblock and outside.in do this.  Ironically, everyblock was acquired as I write this post.  I think both of these companies are awesome, but the model isn’t defensible to me – you rely upon other people’s content.  I can’t see people abandoning their local paper for an aggregator, but I can see them abandoning their local paper for the same thing, but online and more interactive.

I agree with Mike Orren.  The key to success here isn’t just the content and technology, but the sales aspect of it all.  You need to connect with local businesses and you need to show them value.  If you don’t have that proposition down and a sales team that can highlight that, you’re doomed.  This business will not run off Adsense.

What would a Scripps Media for today’s generation look like??

Vote For This Concept

#6 – “App Store” / Marketplace For SaaS (Software as a Service) Apps

**When I refer to SaaS here, I’m mostly referring to paid business/productivity apps such as Basecamp, Balsamiq, or Dropbox**

I remember the days of boxed software growing up as a kid.  I loved getting Computer software catalogs in the mail or visiting places like CompUSA, Egghead software,etc.  It was fun to see the new pieces of software that would come on to the market.  They were like a toy store for me.

Fastforward 15 years or so, and now everything is starting to be delivered on-demand.  As a former founder of a SaaS startup, one of the biggest questions I had was “How the hell do we get sales out the gate?”  It wasn’t like boxed software where people would be browsing a catalog or going to a small and/or large store to browse through.  It was more like having one location and having to bring everyone there.  Imagine if you were a boxed software retailer and you had to drive everyone to your physical locations all by yourself back in the 80s/early 90s? Also imagine if the only way to get iPhone apps was through browsing each software owners website instead of the App Store (no, you didn’t even have an independent directory)?  That’s exactly what it’s like for most SaaS apps.  Sure 37 Signals doesn’t have a problem, but odds are you won’t be 37 signals, nor do you need to be.

Also as a company looking to buy into SaaS apps, you really have no one place to go.  Sure you can google around for some reviews, but that’s annoying.  You definitely don’t have a complete list and database of all your choices either.  There are some awesome apps that are launched every day, that most companies will never ever see.  So where is the unified directory and “App Store” for SaaS applications?

  • Billing and tracking sales is a huge aspect of this.  You wouldn’t want to handle billing for every SaaS software, or require it for acceptance.  Most would never go for that.  You would probably have to negotiate individual deals with SaaS startups.
  • Some of the bigger companies like Freshbooks and 37Signals have affiliate programs.  Just embed affiliate links into the store and directory.
  • You would make money in a few ways: Referral fees as described above, premium listings in the directory, advertising, and also potentially job listings for integrators/consultants on the bigger platforms (Think SalesForce consultants).
  • You would also be creating a brand by becoming the defacto source for all things SaaS.  If a new app launches, you’ll have it there first, with a review, screenshots, thoughts,etc.  You could also do tips/tricks for software (I know I have a ton for Dropbox).

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#7- Online Auctions aka “How To Sell Your Stuff”

This is a really tough area and I’m probably going to be vague here. It’s moreso a “this needs to be done for the good of humanity” problem, than a “I’d start something in this area”. This might be a problem for a startup, or might be a problem to solve for a larger established company. Regardless…  eBay sucks.  It’s a steaming pile of shit and PayPal is even worse.  eBay has endlessly pissed their sellers off and it’s a hassle to sell something there.  I want to post something online and have it reach relevant buyers.  People attack Google as a startup all the time, yet few go after eBay.  I want it to be Youtube one click easy.  Here are a bunch of random thoughts.  Like I said, this is a problem that there’s no one way that could specifically work:

  1. Don’t make it an auction site.  It worked 10 years ago, but most people just want to buy things.  The auction aspect is annoying.
  2. Create a great customer experience.  eBay lived by the sword of community and is going to die by it.  They’ve pissed their sellers and buyers off to no end.
  3. Maybe it will start out as a niche site.  Etsy is for hand made goods, but it could become a whole lot more over time.  The same way Zappos could have become the next Amazon, had they not been acquired.  Shoes were just the starting point.
  4. Does it have to live on one domain?  I see job boards on techcrunch and that’s a good place to post jobs.  If engadget had a gadget marketplace, I’d find that to be a good place to sell my iPhone.  The same thing if Autoblog had a marketplace.  This is probably just a feature, not a solution to the issue.
  5. It has to be social.  iList is doing a great job with this.  They have things done in a clever manner and its easy to use.
  6. How do you avoid the chicken and egg problem?  This is where niche is probably really key to the solution at first.  Even with all the money in the world, you won’t take down ebay with this strategy.  This isn’t a “throw a ton of money at it” solution.
  7. “What Would Zappos Do?”  Zappos tends to just get things done right.  I wonder how Zappos would have built an offshoot eBay competitor.
  8. Wild card: The key is having content. Create an app that lets people catalog their stuff and share it with the world.  eventually they will want to get rid of some of that stuff.  you can also put up wanted adds and anyone with the item will be notified of a chance to sell it.

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#8- Marketplace For Luxury and Rare Items

The Robb Report/Dupont Registry are huge businesses by connecting affluent buyers to the luxury market.  In 2002 the Robb Report was acquired for 150 million dollars.  If you love nice things or just want to day dream you constantly browse luxist, nice real estate sites, rare collectors items (ie- life size iron man statue) or ebay motors ferrari/lamborghini.    Well, there are people that browse, and then there are people with a ton fo money that they come to buy on those sites.  The problem is they are primarily print businesses, and we know what that means – an eventual death and room for disruption.  (they do have online listings, but that furthers my point that they are doing it wrong).  Why not create a marketplace online for affluent people that mirrors the robb report/dupont registry?

  • How do you charge? listing or % of sales? Per lead? If so, use twilio and build in phone tracking.
  • You’d have to give away some listings at first.  That’s fine, get people wet.
  • Youre going to have two types of readers- people who actually buy and people who browse in amazement.  The people who browse in amazement will share your link like whoa.
  • Have more than “cars and houses”.  Have items that are rare and fill the craziest desires of the rich.  Rare sporting items?  Rare experiences and tickets?  Think about the wildest thing you wanted as a kid. It should be available to purchase.
  • Build a brand via events and videoblogging.  Make sure to get a beautiful and classy host.  A friend in Miami made 500k in 2004 by throwing parties for rich people.  Throw the same type of parties, but make them for people who have bought through the site.  This could create an interesting word of mouth effect.
  • No one is going to do a transaction over the site for a 5 million dollar house or 250,000 Ferrari.  Your job is to connect the buyer and seller.
  • Let dealers sell and individual owners sell as well.
  • Solve the chicken and egg problem, by starting out in one geography at first.  I’d pick Miami.
  • SEO will be important as well highly localized PPC campaigns.  Think buy ferrari miami, NOT buy ferrari.

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#9- Local Government 2.0 and Political Campaigns

I don’t care who you voted for. The 2008 election and the Obama campaign changed the way political battles are fought and won.  What was once a “nice to have” way about campaigning is now a “must have”.  Who is going to create tools mixed with a consultancy to let any candidate run their own “Obama 2008” campaign on a smaller scale? The same way a musician can now directly engage their fan base through technology is the same way politicians should be using technology to engage their supporter base. There are hundreds upon hundreds of smaller races every year, so the market is certainly large enough.

Local Government is semi-related to political campaigns.  They both lie in the same sector and focus on doing the same thing, just at different stages- letting constituents interact with the government and politicians in a more transparent manner.  How can we help local governments become more transparent with their decision making process and communicate better with their constituents?  Why isn’t every townhall live on uStream?  Why isn’t there a “GetSatisfaction for Local government?”.

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#10- “Woot For Dating”

Dating is a many to many experience.  “Many people” search through “many people” of the opposite or same sex.  What if you made dating more like Woot.com ie- one awesome girl a day/every week who is not only beautiful,but intriguing.  People pay a dollar or small microtransaction amount, fill out a basic application, and she reviews everyone over the course of a few day period.  You can also send virtual flowers and other virtual gifts to try to woo her.  You start out with one city and expand from there.  Other idea is to pay for the date as well from the fees and record it for the site.  The one major question I have is: how do you consistently drive traffic that converts and is profitable?

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#11- Wildcard: Ramamia – Twitter For Families

This is already a side project, with an okay amount of usage with no promotion at all ie- we put it out there, sent to personal friends and went from there. .  (5,000 users, 3,000 families, 25k photos,etc.).  That’s not a whole lot of usage, but the users we have are passionate and we’re doing something right.  If we can get 5,000, we can get 50,000 and so on.  We’re making the service paid and going the smugmug route, which works well (300k paying users at a minimum of 40 dollars per year and no outside funding).  I fully believe in the project, have had funding offers since we launched in public beta in January, but not sure if its something I’d want to take to the next level.  Add in photo printing and virtual gifts for good measure to the revenue stream.

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#12 – AMEX Black Card Level Concierge “For The Rest of Us” (Mainstream Virtual Assistants)

If you know anyone who has an AMEX Black Card, you understand that their concierge will be able to handle anything for you.  Simple tasks such as booking flights or more complex tasks such as finding a rare item are done without question.  The problem is, the AMEX black card is for those spending 250k MINIMUM a year on the card.  Odds are most of us will never own one.  Oh, they also outsource all their work to a 3rd party company (I need to locate the exact company’s name again, as I’ve lost that bookmark).

Another recent trend is the use of virtual assistants to handle basic tasks for busy individuals and families.  Most people who employ virtual assistants use them quite often, and at least $400 a month for them.  Odds are most of us don’t need that much done for us, but wouldn’t mind a concierge to handle things for us.

What I’m proposing is a simple service that’s affordable for most lower to upper middle class citizens who are busy either as professionals or parents, and need the simple things in life taken care for them by a virtual concierge.  Pricing would be somewhere around 24.99.  Things taken care of would include:

  • Booking tickets for sporting events, concerts, movies, and more
  • Making travel arrangements including your airfare, rental car, hotel
  • Purchasing items for you ie- forgot to buy flowers, buy this gift and ship it
  • Directions– if youre lost, they will help guide you to where you need to go
  • Setting up wake up calls
  • Searching for whatever you need ie- on the road and need to find out what time the restaurant closes
  • Emergency assistance (not 911 worthy) – you need to find a doctor fast while on vacation in a town you don’t know
  • Shipping/Courier–  You need a courier to deliver something you just bought today.

I surveyed 100 random people regarding the idea.  57 said yes they would pay for it and use it, while 43 said no they wouldn’t.  The survey includes reasons why they would and wouldn’t pay for it anywhere from 19.99 to 29.99, along with other services that could be useful. View the survey results here. Some other random notes:

  • Providing value and service is the key. Yes, we’re in a recession, but people need to get over this belief that people aren’t spending money.  They are, just less of it, and focusing on what provides value.  If you’re insanely busy, $24.99 is not a lot to pay for value.
  • You would make money two ways: subscription fees and affiliate fees.  ie- book tickets for someone? you’d get a referral fee for booking through a certain airline.  Same thing with purchases,etc.
  • Corporate accounts would be very big money.
  • For inspiration check out Rearden Commerce.
  • The technology aspect is a very big part of this.  Users should have an account protected by SSL, iphone app to make requests,etc.  Also creating tools for your concierges/agents to make them more efficient is valuable.
  • Do you provide unlimited amount of service at the 24.99 level?  Do you have different levels including an unlimited plan?
  • This could be connected to Idea 8- A Marketplace For Luxury and Rare Items.

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