The Cliff

I got two different business plans from friends today.

Both of these guys are big thinkers, entrepreneurs through and through and destined for greatness. And both had precisely the same problem with their plan. It’s a problem that’s becoming very common… for products, for services, online and off. The problem is caused by our networked world, the quest for the Cow and the goal of reaching a Tipping Point.

In the old days, there was pretty much only one way to grow a business. Start small, make some money, get a little bigger, repeat. Over time, you could fund your way to bigness. VCs can help you jumpstart, sure, but raising 100 or 400 million dollars to skip all the steps on the way to bigness is rare indeed.

YOUR BUSINESS HAS TO WORK WHEN IT’S SMALL IN ORDER TO SURVIVE TO THE POINT WHERE IT GETS BIG.

A magazine, for example, can’t have a business plan that says it will accept no ads until it’s bigger than Time or Newsweek. I call this a cliff business… a business that doesn’t ramp up, but one that runs flat until, miraculously, the business hits critical mass and works.

In our networked world, cliff businesses are a site to behold. eBay, for example, or Microsoft. Natural monopolies that work when everyone uses them. That’s one of eBay’s best assets–everyone wants to use the system that everyone is using.

The problem is, it’s almost impossible to bootstrap a cliff business. The Bluetooth standard, for example, is a great thing when every cell phone and laptop uses it. But it took more than five years of high-overhead standards setting and meetings and commissions and committees before it even began to take off. Had Bluetooth been a business, it would have disappeared long ago.

The best cliff businesses online started with little fanfare (Blogger, or ICQ, for example). Doing it on purpose is difficult indeed. That’s one reason you don’t want your kids to grow up to be songwriters trying to write Top 40 hits. It’s a great gig if you can get it, but you can’t count on getting it.

So… if your product or your service or your business is going to be nothing but trouble until it reaches the cliff, I think it’s better to pick something else to launch. Something remarkable and cheap and likely to make customers and investors happy long before you get to the cliff.