Break through at 2.0
Josey Puliyenthuruthel November 13, 2009
The first time then-researchers Sergey Brin and Larry Page tried to make money from an Internet search engine they had developed at university, they tried selling it as a service to business or enterprise customers. Clients included Yahoo! and Red Hat but licence revenues in the first year, 1999, clocked just $220,000 (or Rs 95.77 lakh then).
It was a new business plan aimed at advertisers the next year that had the sales needle moving at Google, Brin and Page’s search engine. Long considered “evil” by the Stanford duo, paid-listings (the idea was borrowed from Overture, a pay-for-placement ad service) turned out to be the first big push for Google’s revenues—and profits. (In the September quarter alone this year, Google netted $1.64 billion on $5.94 billion revenues.)
Authors John Mullins and Randy Komisar use the Google example to drive home the premise of their book, Getting to Plan B—Breaking Through to a Better Business Model, that more often than not, a new venture does not make money from its first business plan. At a 2008 meeting with several entrepreneurs that venture capital firm Kleiner Perkins Caufield & Byers had backed, Komisar, a partner at the Menlo Park, California funder, found two of three start-ups had abandoned their initial business plan (which Kleiner Perkins had funded!) to move on to a new model (Plan B) or beyond.
Even if this may seem a truism to some, the book makes for a compelling read for entrepreneurs, who’ll get an early start on some realities in their work lives. And, even managers working in established companies will benefit; for no business is frozen in time and needs to continuously raise the bar or face the prospect of customers or competition raising it for them.
The book, published in September, sets a fine tone with several real life case studies—including one on Pantaloon and Kishore Biyani in India—and models or tools that Mullins and Komisar believe will help entrepreneurs and managers to hit their groove. Indian readers, especially entrepreneurs, will find several thoughts to take away from the examples of Apple, Ryanair, eBay, Dow Jones, Costco, Toyota, Shanda, Africa Leadership University, among others, on how these companies started up new businesses by borrowing ideas from others (the authors call them ‘analogs’) or tweaked offerings away fromindustry practices that weren't fixing customer pain.
On the tools side, whether it is the use of what Mullins and Komisar call “dashboards” or the importance of focussing on revenues, profits, working capital and investments, the book offers solid take-aways that can be used to run daily businesses—be it in manufacturing or services.
The message is consistent: be ready to experiment, always. Cribs: the book could be better edited for brevity, language and, at time, facts. That will perhaps be fixed in the next editions and make the book closer to all-time classics for entrepreneurs such as Doug Tatum’s No Man’s Land.