Monday, July 02, 2007

The Internet Technology Dip



I just finished listening to The Dip by Seth Godin. A short and too-the-point read. It got me thinking about the technology dip that occurs with internet startups. This dip used to be very deep, and difficult to push through.

Tools and hardware were expensive, proprietary, and had very low interoperability. You had to have people with very speicalized skills in house to operate it. Now, tools have become democratized, they are cheap or free with the open source movement, there are many available API's and expertise can be found easily often in the form of online communities. Also, you can typically procure enough hardware to with a very low budget to get any project to market. The technology dip has been flattened.

This shows up of course in the market, with the explosion of startups that have anywhere from a small technical component to those focused solely on technology. Now basically anyone with half an idea and access to basic development skills (even self taught) can attempt to enter the market with an internet based product. The dip has been drastically flattened and easily passable producing many half-baked and me-too products. The barrier to quitting at least on the technology front has been drastically reduced.

As an internet startup, if you are planning on using technology to differentiate, you need to understand this change. If you want to be exceptional, you have to move to the next technology dip or dig new deeper technology dips to rise above the crowd. No longer can you throw together a basic e-commerce sight, social networking site, bookmarking tool, or video sharing site and call yourself an exceptional, stand out from the crowd business. Any good VC/angel will see through this as well.

Basic web apps become commodities extremely fast. You need to take your technology to the next level of intelligence creating or entering the next generation dip that your average weekend web programmer will not be able to climb out of forcing them to quit. You need to take existing tools and combine/evolve them into truly value added products that support a need that people are willing to pay for. How can you make your application smarter than every other offering out there? How can you create new innovation by combining business needs with technology?

1 comment:

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