You Can't Afford To Miss These Big Lessons From Web 2.0

Reid Hoffman web 2.0

Some of the world’s most successful serial entrepreneurs and executives took the stage at the Web 2.0 Summit alongside some of the technology’s top visionaries.

Each of them had at least one lesson to deliver to entrepreneurs. We’ve wrapped up each one for you.

Click here for sage advice from some of the world’s top entrepreneurs >>

Play moneyball

The Oakland Athletics were able to reach the playoffs five times in a decade on a budget that was smaller than most other competitors, and they did it by using raw data.

Startups should be doing the same thing, Kleiner Perkins Caufield & Byers partner Aileen Lee said.

'Build a data-obsessed culture,' she said. 'Figure out every point of data that your customers are concerned with.'

Her example was Rent The Runway, a startup that discovered 10 different data points that factored into whether a rental dress would be successful -- including, counter intuitively, the attractiveness of the model and the length of the dress.

Don't charge transaction fees

Transactions should be free, but most companies -- like PayPal and Square -- charge a small fee for each transaction.

But those transactions generate an enormous amount of data, which can be used to re-target advertising and build better marketing, Trialpay CEO Alex Rampell said.

Any company that handles transactions should profit off the data acquired with each payment instead of a transaction fee, he said.

Put design front and centre

Coca-Cola's latest fountain drink dispenser was designed by the same aerospace engineers and designers that worked on the Ferrari automobile.

Not every startup can afford a Ferrari designer, naturally, but the principle should still be the same, Coca-Cola chief marketing officer Alison Lewis said.

'We gave people a fun, personalised experience by leveraging technology,' she said. 'And it paid off because it becomes a marketing machine where we can push out content and market those conversations.'

The morale of the story: good design breeds healthy conversation, which in turn can bring new marketing ideas.

Spin up a supercomputer in the cloud

Amazon now stores 566 billion objects in its S3 cloud storage system, and that shows no sign of slowing down now that some of the top companies in the world -- like Netflix and Dropbox -- use it.

And they all use it for a reason: it's fast, it's dirt cheap and it's bloody powerful. So powerful that today any startup can literally spin up a supercomputer in the cloud and use it whenever they need it, Amazon Web Services vice president Alyssa Henry said.

'Think about what problems you could solve if every one of your developers had access to a supercomputer,' she said.

Know how to use your brand

Angry Birds is no longer just an iPhone game -- though players have downloaded it more than 350 million times on multiple mobile devices. It's an entire franchise with toys, cartoons and, soon, its own motion picture.

Rovio, the company behind Angry Birds, has always known how to use its brand and expand into other channels, Rovio general manager Andrew Stalbow said. That's turned what was once a game into a worldwide phenomenon.

The company has done that by signing multiple deals that will expand the company's reach into other forms of media. For example, Rovio signed a deal with 20th Century Fox Animation to create a branded version of Angry Birds centered around the film Rio.

'Know your brand, expand your brand, give others a platform to use your brand,' he said.

Increase value without sacrificing privacy

Privacy and security have typically had a zero-sum relationship: when you increase security, you sacrifice privacy, and vice versa.

That doesn't always have to be the case with technology improving at its current rate. Instead, developers and executives need to work on increasing security and quality without sacrificing privacy, said Dr. Ann Cavoukian, information and privacy commissioner of Ontario, Canada.

'Privacy does not equal secrecy, it equals control, it equals freedom,' she said. 'Change it from zero sum to positive sum.'

Use data to engage with influentials

You can't buy friends with giveaways and free money.

The same holds true on Twitter and other social media sites, Adobe general manager Brad Rencher said. Instead, companies should use the data they gather from their social media sites and engage with the individuals that are driving a majority of the traffic to their sites.

'As MTV monitored hashtags, for example, they saw a surprise pattern in the data,' he said. 'They saw Miley Cyrus fans were driving the most mentions and retweets of anyone else in that ecosystem, they engaged with them and saw a 40 per cent jump in hourly unique visitors.'

Don't capture information you don't need

There are few things less pleasant than a visit from the Federal Trade Commission, Bureau of Consumer Protection director David Vladeck said.

That's what's coming if you collect information that isn't mission critical for an application, he said. Many developers today run into problems with the FTC for collecting unnecessary information, like geolocation data, and also for collecting information from minors without parental consent.

'If you don't come up with that novel use for that data, it's an albatross that will come back and bite you,' he said. 'You don't want to see us, we don't want to see you, let's just work together to keep it that way.'

Be smart about parsing data

There's a lot of data floating in the ether. At this point, the problem most applications and services have is finding a way to access the right data for the right person quickly enough.

That's left a wide hole open for a company to walk in and take over the business intelligence industry -- if they can find a smart way to crawl through all that data, information-sharing startup Factual founder Gil Elbaz said.

'For too many, the answers are simply not found in time to save one's life,' he said. 'It's particularly frustrating to me when I think about the fact that so often, it's not for lack of data.'

One man's noise is another man's signal

Don't blame Twitter for the information overload of the 21st century, Chaos author James Gleick said.

'It's a signal to one person but they're all noise to everyone else,' he said. 'Some people get it, some people are more explicitly aware of the role information is playing a role in our lives today.'

Instead, individuals have to acknowledge that they don't need to serve as a sieve for that information -- they should actively seek out ways to only follow the information that's relevant to them. They can do that through following specific Twitter users.

People only share content that makes them look good

Not everyone wants their Facebook friends to know they are listening to Hannah Montana. So people, surprisingly enough, lie on the Internet and lie on applications about what they are doing.

'We all wanna be Superman, but we're all really Clark Kent,' chief technology officer Hilary Mason said. 'People only share things that they will build into their online identities, it's not what they actually read.'

And they will always want to have that option, Intel fellow Genevieve Bell said.

'There are moments we lie on the internet, we have not said we are watching the television shows we actually watched, that will always exist,' she said. 'You data is going to be feral, in the most classic sense.'

Change how people live their daily lives

Not everyone can create an iPhone.

But you can still build a product that has a meaningful impact on someone's daily life, Singly founder Jeremie Miller said.

Take Runkeeper, for example: that app has changed the way thousands of people exercise by giving them a way to compete and keep track of their best run times, he said.

'Technology has the potential to help us connect and help us share and help us grow in our lives,' he said. 'We are changing how people live, we are creating new ways to live.'

Ignore conventional wisdom

'If you have guns in the house and pool, your kids are 100 per cent more likely to die from the pool,' said Domo founder Josh James.

That's why companies today should completely ignore the past 20 years of innovation and focus on working on new ideas. Most would ignore that kind of advice as a knee jerk reaction, but James has been doing business intelligence for a while -- he was the CEO of Omniture at one point, which sold to Adobe for $1.8 billion.

He's working again on business intelligence problems with his new gig, Domo, and doing his best to ignore conventional wisdom, he said.

'We weren't focused on the data, we were focused on what to do with it,' he said.

Cast a wide net

If you can't solve a problem, find more people.

'The best way to solve really complicated problems is to cast a wide net and generate a large variety of diverse ideas,' UC Berkeley professor Ken Goldberg said. 'Create a collaborative discovery process.'

Goldberg launched Hybrid Discovery at the Web 2.0 Summit to do just that. His new site will serve as a 'collaborative discovery engine,' he said.

Swing for the fences

'If Larry and Sergey looked at search and said it was fine, we wouldn't have Google,' MC Hammer said on stage at the Web 2.0 Summit.

Hammer's advice to entrepreneurs was to 'swing for the fences' and try to disrupt the largest market they could. That's why Hammer has his own search startup, a deep search company called WIREDoo.

His new company crawls the deep web for specific data that wouldn't otherwise pop up in a traditional search engine like Google. That could include truancy data at a school or more sophisticated data about a stock. He said he wasn't too concerned with the competition he was going up against.

'Nobody's playing for singles in the valley any more, they're playing for the home run,' he said.

Be a global company

When the economy came to a screeching halt in 2008, advertising holding company Interpublic Group also stalled.

That hasn't happened even amid concerns about a recent slowdown in growth now that the company has expanded globally, Interpublic Group CEO Michael Roth said.

'In 2008 our business stopped cold, we're not seeing that now,' he said. 'That's the benefit of being a global company.'

Build products with soul

Flipboard founder Mike McCue thinks too many products these days are built with only big data in mind.

Sure, that's created incredibly efficient websites that and advertising that makes more money, or the most aerodynamic cars.

But what happened to the passion that used to go into designing a product?

'We as an industry have gotten very good at using the data and looking at every square inch of the screen and making it maximally efficient,' he said. 'But at the same time we've engineered out the soul -- where's the emotion, where's the inspiration?'

McCue said designers today need to focus more on developing products that are 'charged with emotion,' like Apple's iPhone.

Have a clear vision

Mark Zuckerberg was described, over and over again, as a man of clear vision at the Web 2.0 Summit this year.

Obviously it's a desirable trait in an entrepreneur, because he's built a business that's worth nearly $80 billion and has always held a clear vision. That's a trait every founder should possess, Pandora co-founder Tim Westergren said.

That's one of the reasons Pandora has been so successful, too. Pandora has always aimed to be a personal radio station and disrupt the radio industry -- not the on-demand music industry. That's why Westergren said he didn't really see the company as a competitor with Spotify.

'A power user for music would listen to Pandora, find some songs they like and then go buy them on iTunes or listen to them on demand by Rdio or Spotify and use them in tandem,' Westergren said. 'It's not 100 per cent distinct, there's obviously some overlap, but I think at a high level the place where we operate in the minds of users.'

Have a crap load of advisers

When Tony Conrad founded, he brought on board 26 advisers.

Yes, 26, even though conventional wisdom says to have maybe five to 10 people involved in the company, Conrad said.

All that advice enabled to grow to more than 1 million users in 300 days. He said other entrepreneurs need to quickly figure out 'who their entourage is' when they decide to start a company first and foremost.

'It doesn't matter if you are a big traditional company or a little startup, lean into it,' he said.

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