Walt Disney

I visited the Walt Disney Family Museum in the Presidio yesterday. The museum recounts Walt Disney's life and how he built the Disney empire.

One thing that really stood out is just how many failures he had to endure. Before the Disney Company, Walt had started another business, Laugh-O-Gram. It went bankrupt. In the late 1920s, Disney's hit character was Oswald the Rabbit. But the rights to the character were owned by Universal, not Disney, and they lost the rights to their money maker. After losing Oswald, Disney had to come up with something new and ended up creating a character called Mickey Mouse. Similarly, Disneyland's opening day was a huge disaster. Disney's story is a story of how persistence pays off.

The In-App Freemium Model

We're now letting users download reMail for free and then upgrade to IMAP support and no ads. Previously we were charging $4.99 upfront, now we're selling features via In-App purchase. I think many useful apps will eventually charge this way. For example, navigation apps might charge you per city or per routing instead of charging $80 upfront. Games have already shifted to selling virtual goods and levels.

Initial sales are encouraging. I'll let you know how it worked out for us once I have more data.

Read more about how we implemented freemium on the reMail blog.

An App Store for Google Wave

In the previous post, I evaluated business models for Google Wave. But there's a promising business model I forgot. It was suggested by Carl Putscher, one of the commenters.

Google Wave App Store

If Google Wave takes off, developers will many build useful additions and extensions using the API. I can imagine that some of these will be so useful that users would pay for them. A third party could then develop an App Store that sells themes, extensions, and subscriptions to extensions. They could then take a 30% cut, much like Apple does for the iPhone.

Verdict: Technically, I imagine that this would be pretty easy to implement for gadgets, and hard for things like themes or elaborate applications - I'd have to see the source code to really judge. The risk here is that Google could do this first. I'd expect they could do this better than any third party could.

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Random thought: It would be interesting to know how the Cydia Store is doing, which is a less restrictive, third party App Store for the iPhone.

Business Opportunities around Google Wave

How could you build a business with the newly announced Google Wave?

Wave is like email mixed with collaborative editing and instant messaging. It's conceivable that the Google Wave paradigm will replace today's group collaboration tools with something less fractured (everything's in one place), universal (document equals IM equals email) and more centralized (one application instead of many). Heck, it could even replace email itself.

What's most exciting, though, is that Google Wave will be open source. Unlike with Google Apps, you'll be able to look inside the box, deploy your own servers, customize, and extend.

Let's say that Google will be able to pull this off, and soon after launch, Wave has millions of users. What business opportunities exist around Google Wave? What can startups, software vendors, and consulting companies offer that could be profitable? Here are a couple of ideas,. I've rated them 1-5 stars based on how promising I think they are.

Migration Tools and Services

Companies today use Outlook and Exchange. If Wave is good enough, some of today's users of Outlook, Exchange, Notes, or even SharePoint could be convinced to switch, either in whole or just for a part of their workflow. Third parties could offer migration tools and services that allow companies to get started and port their existing data - Terabytes of emails and documents - into Google Wave.

Verdict: I think this could be a reasonable play for small service providers and ISVs, provided that Wave is convincing enough for companies. For highly customized Exchange installations, there's no one-size-fits-all approach, so there's a lot of room for service providers and tailored solutions. No billion dollar opportunity here, though.

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Enterprise Wave

The key to making organizations switch to Google Wave is to make it sufficiently full featured for enterprise use. In particular, it's hard to see anyone switching from Outlook without tightly integrated group calendaring, task lists, and mobile sync. Since Wave is open source, you could add those in and sell an "enterprise version" of Wave under your own brand.

Verdict: This could work. Google doesn't have a stellar record in catering to enterprises. Compare the measly 10 million hosted Gmail accounts with the 40 million paid Zimbra accounts out there. Google is better with consumers, and might leave a lot of room for an enterprise version of Wave built by a third party. Played well, this is a billion-dollar opportunity.

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Extensions

There is no shortage of plugins, extensions, and add-ins to Microsoft Outlook: Think Xobni, Gwabbit, ClearContext, and many little helpers that can you extract attachments, schedule emails, or remove duplicate contacts. Some of these tools are highly profitable paid extensions, and it's conceivable that you could build and charge for extensions that add useful features to Google Wave.

Verdict: As a business, this isn't promising, at least for the next few years. What makes building Outlook plugins so attractive is the size of the target market - 400 million users. It took Gmail 5 years to get to around 150 million users, and I expect the adoption curve to be similar for Google Wave. It's conceivable that Google Wave will one day add a "Google Wave App Store", where users can buy extensions and themes for cash. If that happens, this becomes much more exciting.

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Hosting

Since Google Wave is open source, you can host the server on your own hardware. There's no shortage of hosted Exchange providers - a quick search will give you many offerings that will give you an exchange account for $9.95 a month. Similarly, you could host Google Wave accounts for a fee - similar to Acme Wave in the keynote demo (1h:06).

Verdict: Could this work? It depends on what Google will offer for free. My guess is that Google Wave will start as another piece of Google Apps, where it's $50/user account/year, with plenty of space. In hosting, Google has economies of scale - noone runs more servers more cheaply. So forget beating Google on price. Thus, the target market is be reduced to the segment of users that wouldn't trust Google with their data. That segment is pretty small.

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Wave as a Feature

I imagine that this will be the most common type of use for Google Wave. Once it's released, websites will replace systems for commenting and user-generated content (e.g. restaurant reviews) with Google Wave. I imagine this to be much like the Google Wave inside Orkut, shown in the keynote at 0h:24. Integrating Google Wave can be useful for certain type of sites - think Yelp, Foodoro, Divvyshot, or RetailMeNot.

Verdict: This is not a business by itself. It's something that could improve your existing offering, much like using Disqus will increase the quality and number of comments on your page. I can imagine scenarios in which having Google Wave on your site would improve its quality, thus leading more traffic, which in turn gives you more Pro account signups, ad clicks, etc.

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Forgot Something?

As you may have noticed, most of my examples in here come from my understanding of the Microsoft Exchange and Gmail ecosystems. Due to my email-heavy background, I've approached this from an email-centric perspective.

You may also have noticed that there's no five-star idea so far. If you have one, let me know or leave a comment below!

Update: Seems like I forgot one very promising idea: An App Store for Google Wave

I Like this Quote

"Lucky things happen to entrepreneurs who start fundamentally innovative, morally compelling, and philosophically positive companies, creating something interesting and valuable rather than strictly seeking money." - Bo Peabody, Lucky or Smart

I haven't read the book, but I find this one quote nicely summarizes what we'd like to build: A useful product, a positive philosophy, and a great place to work.

India Negotiation Tactics

There are no prices in India, anywhere, and everything is up for negotiation. Having negotiated in various countries, with various levels of success, here's a contrast to Switzerland and the US.



Switzerland: The price on the sticker is the price you pay. Swiss salesmen will always insist there is no room for negotiation. Not always true. Sometimes they'll throw in a goodie for free. Some companies will give you a "Neukundenrabatt" of 10-20% for new customers if you promise more business and insist long enough.

US: Before any prices are named, salesmen will go for minutes, if not hours about why their product is the best, and try to get you to connect emotionally to what they're selling. Only then are prices named, once you're predisposed to saying "yes". Price drops happen only after they've talked to their "manager" or some other - possibly imaginary - higher authority. Insist, assert yourself, set a limit, and be prepared to walk out.

India: A price is named quickly, but it can be a long way to go from there: My guidebook suggests to counteroffer one-third of the price they name. I'm often not brave enough to go that low and counteroffer one-half, then listen to them drop the price by 10%, and then pretend to walk away. Usually, this results in another price drop and puts be at around 75% of the original price tag.

I Want Your .com For New Startup

My new startup needs a name and the corresponding .com domain. I've spent hours and hours trying to come up with something good. Why not crowdsource it? My blog now has over 400 subscribers. Thus, there must be someone in my audience who owns the perfect domain name for a new email / communications startup.

Here's my "wishlist":

• It has to be a .com as people have difficulties with domains like del.icio.us


• If possible, I'd like to closely follow Guy Kawasaki's naming guidelines.


• Unambiguous spelling: It should be easy to map from how it's pronounced to how it's spelled.


• I like alliterations such as FriendFeed, they really stick to your mind. Not a must, though.


• Either a name that has something to do with communications ... (good examples are PostPath, TellMe, Gmail, or Twitter);


• ... Or a word that sounds good and can be used for any type of business, such as Google, Skype, Yahoo, Zimbra, Groove.

To give you some more inspiration, I like these words: shine, glow, joy, happy, dream, sky, light, utopia, drum, jet, jam, fun, run, hop, leap, fly, flow, fast, now, right, easy, wow, zap, clean, and fresh. (Yes, I've tried combinations of these and ones domains I liked were taken.)

Do you have a .com that fits these criteria? Let's chat! My email address is here.

If you don't have a stack of .com domains piled up, please send a link to this post to your friend who does. Thanks for your help!

Re-Reading Built to Last

I'm re-reading Built to Last, the one book I keep referencing when talking about my startup. For one, it's one of the business books that's backed solid comparison studies, and its claims are backed by evidence. But it also emphasizes a style of building a company that makes me feel warm and fuzzy inside. It promotes building your company such that it has:

• Core Values, out of which profits are not the #1 goal, but in balance with interests of employees, customers, and investors. A great example of this is Johnson & Johnson’s Credo.
• Big Hairy Audacious Goals - clear-cut, compelling, cutting edge goals the company sets to progress forward. An example is Boeing’s BHAG of building the 747.
• Cult-like Cultures: A cohesive staff of people who share company’s core ideology, are indoctrinated into the company culture, and develop a tight fit with others in the company, Nordstrom's sales teams operate in this manner.
• No charismatic figurehead leader, but leadership that focuses on building the organization instead of investing their time in extensive PR work. Sam Walton is this kind of guy.
• Constant experimentation that quickly addresses emerging market opportunities. While this is especially true for technology companies, a great example in the book is how Marriott invented the highly profitable flight catering business after seeing its customers buy lunch boxes for flights.

As an entrepreneur, if you haven’t read this book, you should.

P.S.: Here's a great article about the book's validity today.