There is a lot of noise out there in the blogosphere, particularly in the tech business press. A lot of it is, frankly, re-hashing conventional wisdom and talking about minor, incremental changes that don’t have any real, lasting impact. Not a lot of it is original thought and it’s rare to see much disagreement. It often seems like a happy, karmically satisfying echo chamber.
So I was happy to read a couple of thought-provoking pieces in the last few days, both ironically (or not) from people associated with 500 Startups — Cesar Salazar and Dave McClure. They’re important for different reasons, which I will explain below.
Cesar may have actually coined a new phrase with his article, “Key Igniting Observations.” I don’t know if that was his intent, but it’s a great use of words. The basic thrust of his argument is this: business ideas are important, but to be valid they have to be stimulated by an experience or other situation that causes an “a-ha” moment. Many entrepreneurs talk about “solving a pain point” but the phrase “key igniting observation” (KIO) neatly captures that instant in which an entrepreneur’s mind registers that not only is there a problem, but that it can be solved. (He also notes that the KIO doesn’t necessarily lead to a solution.) He illustrated his point by re-telling one of the best stories from Richard Branson’s book, about the origin of his interest in starting an airline.
The takeaway here is that much of the world seems to believe that great entrepreneurs are different because they are ”spontaneous ideators,” with a gift for conceiving brilliant business models out of the clear blue sky. Nothing could be further from the truth — in fact, the notion of a KIO shows that entrepreneurs are different because they are constantly looking at the world, seeing its flaws, and using their observations to choose the opportunity to solve a problem. I hope Cesar’s phrase receives wide adoption because it’s an excellent summation of an important concept.
If Cesar’s post was fascinating for its philosophical nature, Dave McClure’s post, “What Hasn’t Changed: the Internet Keeps Getting Bigger,” is interesting to me because of the bit that will probably be glossed over by most readers.
McClure’s post is mainly a response to a recent article by well-known VC Fred Wilson, in which the latter argued that investors are shifting their focus from consumer-based business models to the enterprise. I tend to believe that McClure’s observations are probably correct (i.e. that there is still plenty of room to build consumer-facing businesses, that the space is far from crowded, and that enterprise is a poorly-understood space). But that isn’t what jumped off the electronic page for me.
The more important point, at least from the perspective of this blog, is this: consumer Internet businesses, if they were ever only about the developed world, are no longer so. McClure puts it succinctly:
“…for those of us that invest outside Silicon Valley and New York, the global consumer opportunity is huge as well in Asia, Latin America, the Middle East, and other fast-growing Internet and mobile markets.”
Sadly, this important observation (a KIO, perhaps?) will probably be overlooked by most readers because the underlying point is this: most investors aren’t investing outside Silicon Valley and New York. Why? Well, mainly because it’s hard. Not as hard as most people think, but hard nonetheless. And, if McClure is right, there is so much potential remaining in developed markets that there is no need to shift capital to developing markets.
Or is there? McClure continues:
“…in most of the US and EU, it’s taken for granted you can pay online and have goods delivered to your door. While this isn’t the case yet in many big markets in Asia, India, Latin America and Easter Europe & the Middle East, give it another few years and it will become commonplace.”
Again, a significant point in a larger paragraph saying that monetization is actually getting easier. But McClure may have been understating the potential in “foreign” markets. In many parts of the world, e-commerce has either already arrived (e.g. Brazil, Poland) or is very close on the horizon (e.g. the United Arab Emirates, India, Mexico).
This doesn’t mean that the consumer story for the United States is over. Far from it, since it is very likely that if the US Congress can get past the “fiscal cliff,” an economic recovery in America is likely. But I hope some of McClure’s many readers take note of his international focus. That is one of his personal key differentiators.