Free is not for me

During our class with our Angel in Residence Barbara Clarke we discussed different types of revenue generation models. For my application I was initially inclined to make the product/service available for free to the consumer and rely on advertising as a way to generate income from the product. Barbara discussed how this model no longer was viewed as a lucrative option by firms and that ad revenue has continued to decrease for many firms who have used this as a revenue generation model. Another popular revenue model, but one that I believe has many flaws and is beginning to lose value is the membership model. Revenue is not as easily predictable because in order to encourage users to sign up you now need to make it fairly simple to allow people to cancel their subscription. The third option for evaluating is the pay per use model. 

Ben Milne of Dwalla spoke about his start up on Kahn Academy which is focused on reducing the costs of transferring funds between people using a pay per use model.  The scope of the money transfers market exceeds 30 Trillion per year. By charging customers per use instead of a percentage fee of the transaction Ben is betting that Dwala can win significant business. At .25 per transfer and free for dollar amounts less than $10.00 Dwolla is sure to put a dent in banks and merchant processors revenue forecasts.   Check out their website at https://www.dwolla.com. 

Using the pay per use revenue model combined with a now-ist philosophy constant innovation by way of existing product improvements, add ons, and complements will be central in developing my applications and products. Zach Kaplan of Inventables (https://www.inventables.com) spoke about how he first learned as an entrepreneur that it was important to understand how to sell things to people and the concept of being able to sell anything if you understand who your target market is and how to sell to them. Zach also discusses how the AI age has removed the barriers to entry in getting a product/service to market. His approach is to try it, test it, and if it does not work do something new. "Learning about something unexpected helps you to think of new concepts that may be possible." Intuit takes a similar approach in asking themselves "how are we the best in the world at problems to solve". This requires Intuit to constantly identify the major problems to solve and continue to innovate. This methodology will be part of my revenue model as I look at constantly evolving applications to meet market changes or new consumer needs. Profitability will be contingent on creating applications that will have a broad enough demand in the marketplace that will also increase demand for compliments to the application. 

Becoming a "Now-ist"

The first step in my field work was to investigate the world of innovation and educate myself on the practice used by the top innovators today. Below is a sampling of the lectures and modules I have viewed through resources such as Ted.com and Kahn academy. Viewing these speakers online has given me the unique opportunity or replaying and researching topics as they are discussed. This practice has been helpful for me in developing the initial stages of my process and I encourage you to view the selected talks I have outlined below.

Joi Ito's Ted talk "Want to innovate: become a now-ist" compares innovation pre internet of BI (before internet) and AI (after internet). In the BI stage, innovation was about thinking into the future and developing your innovation around a business model that was then "deployed by VC firms armed with an MBA education". The internet drove down the cost of trying a new idea or concept and made the world more complex and unpredictable. In order to survive in a AI world, Ito argues that innovation has become a "bottom up process; we need to learn how to be open and alert to what is going on around us", to be present. We have moved from a software or service model to a design & innovate model. Successful entrepreneurs will "learn to build quickly, improve constantly and with out waiting to for proof or permission that you have the right idea". Ito also pushes the concept that we need to move away from relying on large corporations for innovation as their bureaucracy and process's are geared towards looking into the future instead of responding to market conditions today. Scott Cook founder of Intuit touched upon this in his Kahn Academy module. Cook has created teams within Intuit who are tasked with innovating products and services and to innovate and publish for consumer feedback in as little as 3 days from start to finish. This enables Intuit to respond to market changes as if they were a small firm by eliminating the typical corporate road blocks that cause big firms to miss out on innovation.

When you search the word "entrepreneur" on Ted.com Maya Pen's talk returns as the top result. Maya is a 13 year old entrepreneur who was featured in Fortune Magazine for starting an online business at the age of 10. Maya's ideas for business's were based on materials she found at home that she was able to craft into items and sold online. Maya's mantra is that we are all able to create change and that creating change can help us to solve a problem or discover a new market. Successful entrepreneurs need to train themselves to not only embrace change but to train themselves on the concept of constant innovation as a discipline. Maya has learned to follow her interests and innovate in each of her new spaces. This has enabled Maya to create a cartoon focused on educating people on the important role bee's play in our ecosystem. Check Maya out at "http://mayasideas.com/pages/about-us" to learn for yourself how inspiring a "now-ist" like Maya can be. 

The third result when searching with the keyword "entrepreneur" on Ted.com returned " Eric Giler: A demo of wireless electricity". I have worked with Eric as a client and have heard him give this talk before so I thought it was a good opportunity to incorporate his talk into this blog piece. The idea of wireless electricity was after the 3rd night of Dr. Marin Soljacic listening to his wife's cell phone beep that it was losing power. Dr. Soljacic found it ironic that his wife's phone was losing power only a few feet from a wall where electricity was running though. In this case his job to be done was to enable electricity to travel to the device without wires in order to charge his wife's cell phone battery. Check out Eric's engaging presentation at
http://www.ted.com/talks/eric_giler_demos_wireless_electricity. WiTricity is another example of innovating in the now. Taking a bottoms up approach to innovation, Dr. Soljacic had to be open and alert to his surroundings in order to identify the JTBD. He then applied the concept of "demo or die" by testing his hypothesis by trying to light a light bulb with a team of colleagues at MIT. The success of his innovation confirmed that he should focus on moving his idea forward.

My research on innovation and e-ship has confirmed my theory that in order to build and innovate my product set I need to test and publish applications for small business's to use to effectively enable them to operate their business. In my prior experience of running a successful business the products and services that I offered grew from what my customers demanded coupled with me being willing to meet that need for an agreed upon dollar value. Some services flourished and others missed their mark, I learned to continue to move forward in the process. My biggest set back in not being able to continue to move the business forward and into an even more profitable direction was my lack of confidence in myself, an emerging fear of failure and not having the community of practice that the e-ship program at SOM can provide me. The next step in my innovation process will be to build an application over a 3 day period that I can submit to be published through an application store. From that point I will receive feedback that will enable to move the process forward in one of two ways; innovate based on feedback to publish or have application published and innovate on user feedback and trends. Although I lack the expertise in programing an application Zoho (www.zoho.com) will enable me to launch and innovate my customer application.