The media today is awash with stories of dotcoms starting, getting funding and as quickly closing down. The culprits are too much money in the wrong hands, irrational expectations and a completely useless value-add concept.
What is the value add here? That should be the question every dotcom entrepreneur should be asking oneself? Its a fundamental question every business needs to answer. If you don't give value - you die. Simple as that.
Some of the ideas I am seeing are so flimsy that they do not deserve to survive. Instead of simplifying lives with a great value add they increase the complexity for users. Some of the ideas are so hair-brained I think they might have occurred to the owner in the shower (probably true).
We tend to celebrate entrepreneurs who come up with innovative ideas, rewarding, awarding and giving them platforms. Most times they are just bad business persons who clutter the market and people's mindspace with products/services that have no business being there.
That brings me to my main point. Is the doctom brigade correctly calculating the value add provided by the service they want to launch.
Value add should be in 3 tangible parameters
In the entrepreneur's mind all three value adds are clear but it rarely works out in reality. Most dotcom entrepreneurs underestimate the value-add or are completely deluded about it.
Every start-up presentation I have been to, I have seen the owners talk about service / product features, how it will make people's lives better or how it will be better than the competitors products. I have rarely seen a presentation where they clearly demonstrate the value add. The problem is value-add is a tricky thing, its subjective as well as quantitative but based on assumptions and predictions.
The local cablewala was unreliable, quality of reception was atrocious and we felt overcharged and cheated. DTH gave us a clear value add in terms of quality, time saved (no disruptions in service) and crystal clear picture. They gave me a value add bonus on each of the 3 parameters, time, money and quality. Although this is not a dotcom example, it clearly demonstrates value add.
The dilemma for me was how to read the books I wanted to read without spending a fortune and also spending time loitering bookstores for good book deals. They solved my problem with a clear value add. A ridiculously low yearly fee (equivalent to buying just one or two books) and doorstep delivery. They have clearly solved the first two parameters for me - time and money. They still are getting there with the third parameters (availability of books and gaps in the collection) but 2 out of 3 is always a winner. I just hope they are making money.
Some questions wannabe dotcomers must answer:
- Is the service/ product I am introducing going to give significant value add in terms of either money, time or quality?
- Is the value add clear and defined and not some fuzzy concept of savings or novelty?
- Is the value add something people will pay for i.e. will time saved or money saved or quality improvement = revenue from customers.
The last few months have seen some ridiculous concepts and ideas hit the dotcom stage. Some might survive and thrive but without a clear value add advantage they are simply trying thier luck instead of going deliberately to plan.
Cheers,
Ron
