Owing to the nature of the service it provides, CheeseCare has been in constant interaction with various online businesses pertaining to different industries and service verticals. Among many other things that we learnt from all our associations, one very important observation has been that the success or failure of any online business depends not only on the idea, but more importantly on how that idea is executed.
Talking of ideas, exclusivity is hard to achieve, given the current scenario. Inspite of all copyright and patenting schemes, nobody can actually have a “right” over any idea, simply because there are so many people who can think, and comparatively very less things to be thought about. The idea of doing anything “first” is now being replaced by doing the same thing “best”. In the context of online businesses, this is very true. Google was not the first search engine, but it emerged as the best. The reason for being the best lies in the way the idea is executed.
For Google, the idea was not new. Yahoo and a few others had been offering search services before Google. But Google came with a better execution of things, which was simplification of the interface and a much better presentation. While other search engines looked more like a collage of advertisements, Google placed the ads intelligently, which was received very well at the user end. The simplicity of the interface lies in the fact that the Google homepage had nothing more than the Google logo, a text box and a search button. That is all you need to begin your search. This execution model catapulted Google ahead of any other search engine, and to this date, web-search has been synonymous with Google.
Introducing a new service on the net can be a good idea, and I do not deny its possible potential to flourish as a successful business. What I am suggesting is that if you want to do something, don’t back-off with “Ah! It’s already done”. Instead, try and think if you could do it better than it already has been done. There is one more important point here. For most businesses, the market is large enough to accommodate the coexistence of more than one player. The cola market would be a perfect example, with both Pepsi and Coca Cola getting ample business shares worldwide along with several other smaller players. In the online scenario, take Blogger and WordPress, both of which have a substantial user-base, or take social networking where apart from major players like FaceBook and Orkut, many other websites boast of substantial users, although in the latter case a recurrence is quite possible. Coexistence is seen when the competitors are almost equally good, or maybe they satisfy the tastes of two different kinds of audiences of the same service.
Another case that frequently occurs is that many people independently attempt to do the same thing, and yet, only one of them appears as a successful leader. Here again, the first website going live cannot be sure to be the most successful in the long run, although this might be a possibility. The point is that more than the time of execution, it is the model of execution that makes a difference. Take the case of Zappos, for instance. It is a $1bn+ turnover company recently acquired by Amazon, which sells shoes online. Zappos is just a retailer and does not manufacture the shoes. The idea of retailing shoes online could have been implemented by anyone, yet there is no other online shoe retailer enjoying the loyalty anywhere near Zappos. Even a company like Amazon with all the muscle power could not copy Zappos, which indicates that there must have been something very strong about their execution model. Zappos has recently launched a website where they have shared such information about how they conduct their business. One thing to note is that even in such cases, we cannot infer that the market has room for only one major player. Anybody would agree that online retailing of shoes could have very easily had more than one big name, if some other competitor had been successful with the execution part. This highlights the importance of my point.
Talking of acquisitions, there is one more very good example in the case study of PayPal. The idea of web-based fund transfer was not introduced by PayPal, but it happened to be perfected by them. The importance of execution can be realized in the fact that all the other players providing similar services were forced to shut down as they could not handle the huge losses occurring due to frauds. What happened with PayPal was, that one of the cofounders, Max Levchin, happened to be an expert in crypto and security software, and at an earlier point in his life, intended to start-up something related to that very idea. But then PayPal got started, and as soon as he realized that fraud could cost them a lot, he put to work all his skill in security and along with the help of an intern among other people, he devised a mechanism to combat the fraud, which PayPal has not talked much about. But that happened to be the thing which assured the survival of PayPal, which soon emerged as the most prominent method of fund transfers on eBay. What happened next was that eBay attempted to create a similar product, and failed, lacking the perfect execution of PayPal, and offered to acquire it. The strength of the PayPal execution model can be assessed from the fact that the owners of PayPal were able to negotiate the take-over with eBay to such an extent that eBay ended up paying $1.5 billion to acquire a one year old startup in 2002.
The concluding point in this post is that building an online business is not walking the moon. While we always talk of Neil Armstrong as being the first, we are not much interested in PowWow being the first GUI-based chat program for Windows; what interests us more is that GTalk is the best.
