A conversation about Chicago web 2.0 start-ups
Chicago start-up Humanized is launching something new this week, Songza (www.songza.com).
All CB readers are invited to the launch party this Thursday, Nov 8th, from 5:30 to ~9. It’s at Elephant & Castle on N. Wabash. Free beer provided by New Belgium (the Fat Tire people).
I’ll be there, should be a good time.
I remember when I was a kid someone presented me with this idea: if you could collect 1 penny from everyone in America, you’d be a rich man. At that time, it was probably a little more than 2 million bucks, today it would be a cool 3 million.
The obvious problem is that it would cost you more than 1 cent of effort to collect each of those pennies.
My previous two companies always focused on offering high value (read, “expensive”) products or services and selling them to a relatively small number of people. It’s not until I’ve started to get traction with my Facebook apps that I’m truely appreciating the power of the reverse. My current Facebook application Grow-a-Gift has been used by more than 3 million installs and about 300,000 people use it on a daily. It allows you to send a virtual flower from one user to another with a private message attached.
To most people this application doesn’t offer that much value. In fact, I bet a majority of the users wouldn’t even go through a standard website registration process to accept the flower they have received, I would be asking them to spend 3 cents (of their time) to get 1 cent worth of value. But Facebook makes the customer acquisition process so incredibly efficient, it’s literally a 2 click install, you don’t even have to type your name! Just like that, Facebook has made it efficient for me to collect millions of pennies (read, “users”).
The most common criticism I hear of these new Facebook applications is that poking, free gifts, funny pictures–these things are too un-serious to build a real business around them. But you should never forget, if you collect enough pennies you’ll be a rich man!
It’s been awhile since I’ve posted. I’ve been in state of reclusion that immediately follows starting a new company. JobCoin is still going well, but I’m cooking up something new. I’ll share more details as the team materializes.
But today, I’m here to bless you with someone else’s ideas rather than my own. An acquaintance of mine sent an e-mail about the all-to-common refrain criticizing “income inequality”, the “gap between the rich and the poor”–pick your wording, I’m sure you’ve heard it before.
His response to these remarks:
What’s the matter with the other segments of the population? Why aren’t they doing their part, as the top percentile is doing so superlatively, to create wealth?
Well put!
Update 11/4:
I don’t know all my readers, but I was surprised to receive a negative reaction to this. The focus of this blog has always been around business, starting businesses in particular, so I assume my readers share a common context with me. However, I do admit that the context this statement was building upon is not obvious, and it’s not correct for me to assume it so let me elaborate to make the full meaning clear.
Let me apply the idea of income inequality to a different scenario, I think that will make things more clear. Imagine sitting in a theater listening to listening to a superb piano player, the person next to you turns and remarks, “That person is just too good. Look at them, it’s like they aren’t even trying, that music is just flowing from their fingers. Now that this person is on the scene they have just widened the gap between amazing piano players and the rest of us novices.”
I mean someone really saying this, not as a joke, but with a touch of viciousness about the issue–that this person being good is making the rest of us look bad. One could respond, “This person isn’t ‘too good’, there is no such thing as ‘too good.’ If you want to criticize anyone, you’d have to criticize you and I for not being ‘good enough’. We should be celebrating this person’s ability, not grumbling at the supposed ‘gap’ it creates between us and them.”
Now of course, it is wrong to criticize the people of average ability than it is to criticize the people of superb ability, but the response is showing just how absurd the commentator’s view is by emphasizing the opposite of it.
Now back to the original quote. The context I mistakenly assumed about business, which I will state explicitly now, is two-fold. First, that value is something that is created by people and the act of creating it is a skill. Just like playing piano, some people are better at creating value than others. And just like playing the piano, creating value is a skill that can be learned and improved upon, but like any skill, there are limits to one’s potential to improve. Some people are so naturally gifted at creating value that even with a lifetime of practice, I’ll never be able to catch up.
And second, value creation is not a zero-sum game. All this talk about “income inequality” and “gap between the rich and the poor” assumes that the more value–wealth–that I create, the less of it that is out there for someone else. But this idea is just not true. Anyone who has started a business, who created something new to the world where simple raw materials existed before–cannot evade the fact that value is literally created, there is no limit to how much of it we can have and we all benefit the more of it that is created.
To summarize, this is the context I keep in mind when I hear people talk about “income inequality” and grumble at the superb value creating abilities of a small number of people and complain that this is somehow a bad thing. I remind myself of all the amazing conveniences of modern life that this small minority of people have helped to create for all of us–my iPhone, wireless internet, free phone calls around the world, portable movie players–and I don’t damn them for making me look bad, I remark to myself with admiration, ” Imagine what the world would be like if we were all that good!”
Update 11/5:
I’m not interested in engaging ad hominem responses so I have closed the comments.
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