Is Your Start-up Built to Survive?
Games, gadgets, software gizmos. Although always interested in consumer leisure pursuits, the tech industry seems to have embraced them with abandon in the past few years.
Facebook had an IPO that dwarfed Google's. Zynga was hot when its stock hit the market. Instagram sold for $1 billion-plus to Facebook. Mobile is so hot that it has caused Microsoft to turn its corporate strategy in a new direction. It's enough to make an entrepreneur salivate.
And when Hurricane Sandy hit the Northeast, as trying a time as many will ever see, people did turn to their smartphones. However, they weren't looking to take faux retro pictures of their lunches. Instead, they wanted maps, news, and financial applications. It's an important point when considering your company's strategy. Do you want something ephemeral that will catch public attention for a while, or would you rather build a more sustainable business providing what people really want and need?
According to usage statistics pulled together by AllThingsD post-Sandy, financial app use jumped by 74%. News went up by half. Navigation and map use doubled. These statistics might seem obvious, but they aren't necessarily except as after-the-fact rationalization. For example, music app use jumped by 44%. Game use was up--lots of free time on people's hands--but only by 19%.
When conditions were critical, people didn't care about disgruntled avians or automated hipsterism. They wanted and went for what they perceived as necessary. Selling customers necessities may not give the frothy earnings of a fad when it's hot, but it can last much longer.
Not that riding an ephemeral wave is necessarily a bad thing. Clearly, the Instagram owners made a bundle. But getting atop the crest is difficult, if only because there is no way to know in advance when and where it might come. Zynga was decidedly on top not that long ago. Now, it struggles to find games that people will want to play.
The point is not to chase what people relied on during Sandy. Nor is it to necessarily write off developing a business that people associate with fun. However, entrepreneurs should explicitly consider which direction makes the most sense for their backgrounds, abilities, inclinations--and customers. The more central you are to their lives, the more likely you are to succeed in the long run.
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.