Supernatural Agency: Online business tales

The current situation with domains as a business model has led to comparisons with real estate, the Western land rush in the 1860s, the gold rush and other opportunities. Lately, as our focus has increasingly been on our domain portfolio, I’ve been trying build a comparison model between a classic investment portfolio and a domain portfolio. There are similarities:

• You take a risk by investing in unknown potential
• There is an active market based on an auction model (stocks are basically sold in a constant auction)
• There is easy liquidity- the domain can be quickly transferred. This is where the real estate comparison breaks down.

And there are significant differences:

• The cost of entry for domaining is ridiculously low, so low that many domainers start off as hobbyists. This low cost is rapidly creating what we think will be a huge price balloon, comparable to the Tulip Mania that brought down the Dutch economy hundreds of years ago. Regular people used leverage to buy and sell bulbs. The prices went crazy, the smart people got out and the newbies got crushed.
• The market we see today is a tiny fraction of the potential.
• You can change the value of a domain through your own actions. This is the big one. I can’t increase Apple’s share price by buying an iPhone. I can improve the value of a domain through SEO, content, SEM, various monetization strategies etc. Here it does resemble real estate except that the cost of developing domains is only measured in time spent- there are no physical costs to speak of.

I’m pondering this because I’m interested in raising money to expand our portfolios. This is a very different value proposition than raising venture money in exchange for stock. An investor might invest in a specific domain or family of domains and that investment would be used to grow that portfolio’s traffic and revenue (which might be distributed as a kind of dividend or reinvested). At some point the portfolio is sold and proceeds distributed to the owners. We might keep a management fee in addition to our own ownership portion.

I don’t know the legal implications of this kind of offer- these are not securities. When you think about it, we’re in wholly new territory here.

Several years ago, at the request of one of my publishers, I wrote a book about motivation and small business. It’s out of print and I’m not recommending it because things have changed drastically, resource-wise, for entrepreneurs dealing with motivational issues. However, staying motivated is still a huge challenge when starting and growing a business. Oftentimes you find yourself working alone on something most other people don’t understand. You are taking risks that most others would never take. And you face the possibility of failure every day. It’s the nature of the beast. And it can create serious motivational mood swings. Anyone who is an entrepreneur knows what I’m talking about.

Think about the word motivation. It means, in it’s simplest definition, movement. If you are unmotivated you are stagnant, unmoving, inactive. For a new business this is deadly, making motivation a critical business resource. Fortunately there are several basic steps you can take to ensure that when motivation issues crop up you have a plan in place for dealing with them:

• Keep yourself and your people healthy. That means exercise, good eating habits, enough sleep and requiring people to actually use vacation time. Those of us developing Internet businesses tend to spend a lot of time sitting in front of a monitor, eating junk food and working long hours. While this may be productive in a crunch time, over the long term it will create a loss of energy and general depression. Break this myth of working long hours fueled by pizza and Red Bull. It simply does not work over time.
• Very specific company and personal goals detailed in writing. This is an incredibly powerful technique that few really use. I have a list of very specific goals that are categorized by personal, business and community. They are detailed. I know how many aggregate page views I want from our sites next year. I have very specific financial goals. We have a detailed list of sites and projects with priorities that we are constantly fine tuning. My personal goals cover a wide variety of things from spiritual health to travel plans. You should create and environment where your people and your company have these goals, write them out including visualization language (“our new office will be a downtown loft by the river with modern furniture, large monitors, an espresso machine, etc.”) and read and review them daily. The last part is important. I carry mine around with me and make sure I read them and fine tune.
• Break down overwhelming tasks into small, easily accomplished tasks. The ideal to do list includes a lot of things that are doable in one sitting. Every time you check one off you are not only one step closer to completing that overwhelming task, you also have a sense of accomplishment. Setting goals that are overwhelming is de-motivating: you must be able to see a clear path to that larger accomplishment.
• If you reach an impasse and can’t seem to find a solution to a pressing problem, let it go. Take a long walk and let your sub-conscious think about it. Don’t be emotionally attached to some options and don’t leave out the hard or scary ones. Simply examine each option and run a scenario: If I do this, what will take place? I don’t know why but walking seems to create the optimal state for regaining perspective. You can take in the scenery, breath some fresh air and let your brain settle down.

Motivation is not a mysterious challenge. If you are lacking motivation because you have doubts about the viability of your plan or are losing interest you may be getting signals that the business you are in is not right for you. There are two options. Get out and find the right project or reinvent the one you have. Most start-ups evolve into something quite different than what the founders thought they were doing. We started out seeing ourselves as a media development company but it increasingly obvious that we are also in the domain business.

Finally, a note about failure. It is a cliche that nearly every successful entrepreneur had several failed attempts before their first success. It is  generally true and I’m no exception. The reason is that entrepreneurship is a very hard thing get right and all the books and blogs in the world can’t duplicate actually doing it. You’re going to screw up a lot and you might fail. Don’t let that de-motivate you. Ask any VC- they fund many people who have failed businesses in their past. It is invaluable to have any start-up experience, good or bad. Your peers will never think the less of you for a few mistakes.

Semi-reliable (they actually do research instead of making things up like The Street’s Cramer) Apple rumor site AppleInsider offers a possible confirmation of my iPhone/iTunes/Mac OS platform theory with their story today about next gen iPods having full screens and a version of OS X.

It seems pretty obvious to me that the iPod as we know is evolving into something very different than that original paradigm changing elegant music player. As a brand, iPod is iconic and got there very quickly but the iPhone brand hit even faster even though, IMHO, it is much weaker as a brand with legs- since the device itself is so much more than a phone and will become even more so as Apple keeps upgrading the software.

Imagine an iPhone that includes these very likely improvements:

• True digital video with audio, lenses facing both sides of the device
• GPS tied into geotagged Google searches
• True IM over wireless
• Video conferencing via the above-mentioned DV and IM (iChat)

What they are doing is eliminating location as a prerequisite for socializing. This because they’ve recognized that things like social networks and blogging connect people regardless of location. When I started my climate change blog, I focused on local affects of warming and climate/energy issues. However it became apparent that because, today, everything is local; my blog was being read by people all over the planet, some of whom regularly communicate with me to the point where we plan meet-ups when we are traveling near each other.

Apple understands the significance of this much better that other device makers and software companies like Microsoft because they build for an enhanced future user experience- they are change agents in society. I think this vision and approach can be directly attributed to Steve Jobs. His legendary obsession with the user can only be driven by an equal obsession with predicting future human social behavior- they go hand in hand.

So what does this have to do with Supernatural Agency? It makes our business model possible. Mike is traveling this week and working from a beach house. I am in my office. We’ve launched two new sites this week without any need to be in the same physical location, in fact I’ve had no sense of anything being any different from when he is in town. This is the model Apple is enhancing with the iPhone/iTunes/ Mac OS platform strategy. Works for me.

When Gibson published his last novel, Pattern Recognition, he announced that he was no longer writing speculative or science fiction including the cyberpunk genre he is widely credited for inventing with his incredible Neuromancer, written in 1984-5. Neuromancer got a lot of things right about a not too distant future that increasingly resembles the present. Because the present is evolving so quickly, Gibson now sets his books in these times. And that’s why I’m reviewing his latest as a business book rather than a sci-fi novel.

Anyone starting a tech-related business (which is really any business) these days has to try to anticipate where things will be a year or more out. This used to be relatively easy as there was a much slower development pace and information traveled in predictable ways. Now a business can be vaulted to the stratosphere in hours or plunged into non-existence by a previously nonexistent competitor. To survive we must all be futurists and scenario planners on a daily basis. Since Gibson is, at his core, a scenario planner par excellence, his new books are a crash course in this arcane art of predicting ‘what if’ situations so you can develop a business response.

Spook Country sets up a plausible scenario: A shipping container with a mysterious payload is being tracked and sought by several groups spread across North America. One is a Cuban crime family, another a journalist covering technology-enabled art and another a possibly Government-backed set of spooks (agents). Gibson weaves this together with an array of innovative uses for technology including iPods, GPS, virtual reality (remember that?), etc. The locations are wired and the characters are imbibing various exotic drugs and cocktails. It’s all very entertaining but it is also enlightening. How will the way we do transactions change? What does being trackable in real time, anywhere do to consumer behavior? What are the valuable commodities of the near future?

As you read this and Pattern Recognition (which accurately predicted the advent of consumer-generated video with a brilliant premise) you will find yourself speculating on these and other questions. Put your business in the context and you may find opportunities others are not seeing.

Any book that accomplishes that is a great business book. And Spook Country is even better: It’s a great read too.