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Overview

In the late 1990s, there was a huge boom in startups that resulted in the bursting of the Dot Com Bubble around 2000. Many companies went under, but it wasn’t long before new ones emerged. These were part of Web 2.0 and had user-generated content as their focus. In 2006, Jessica Livingston interviewed founders from early days to those who had started companies like Flickr and Blogger to figure out what they learned about starting a business.

Technology has changed a lot since 2007, but the stories of these pioneering entrepreneurs are still relevant today. Even though some businesses and technologies have faded away, it’s important to understand them in order to better predict the future.

In this article, we’ll look at how Paypal and Flickr started out as different products. We’ll also see why Yahoo paid millions for a bunch of website bookmarks in 2005. Finally, we’ll examine the pros and cons of getting investor money for your business idea.

Big Idea #1: Many startups, like Paypal and Blogger, didn’t end up with the same idea they started out with.

The author spoke with a number of startups and learned about their commonalities. One thing that most had in common was that they started out with an idea or product different than the one they ended up with.

PayPal is a good example of this. It’s one of the most popular ways to transfer money online, but it didn’t start out that way.

In the late 1990s, Max Levchin was working on handheld computer software. He created an emulator that generated single-use security passwords for devices like the Palm Pilot. This made obsolete bulky, expensive devices that people previously had to buy for this purpose or even several of them depending on their needs.

But the market for that service wasn’t big, so Levchin thought about what people needed to keep secure on their devices. The answer was credit card information, which led him to create software that let you securely beam money from one Palm Pilot to another.

PayPal had a slow start, but once it focused on transferring money online, the company gained 20,000 users per day. Ebay eventually bought PayPal for $1.5 billion in 2002.

Evan Williams, the founder of Blogger.com, didn’t expect it to be a success when he was developing software for project management. The blog was just one tool that they were working on at Pyra Labs.

But in creating that software, he made it so anyone could use it. It was free and accessible from any computer. He almost went broke but his determination paid off because the fans loved the product and Blogger became a success story. It gained millions of users, started generating revenue, and was acquired by Google in 2003.

Big Idea #2: Having an innovative idea can make it difficult for people to see the potential for success.

Many startups face similar problems. They have innovative ideas that are difficult for others to grasp, which is problematic if they need funding or people’s support. Take the example of Steve Perlman and his WebTV idea. In 1995, he was already a respected figure in Silicon Valley for helping Apple develop the first Mac with a color display, but it was hard to convince people about interactive TVs via cable TV networks.

In the past, televisions didn’t have interactive content. It was difficult to create it because there wasn’t any hardware for it and there wasn’t a market for it. Many people believed that customers wouldn’t want to interact with their TV since they could only change channels. However, WebTV proved them wrong by being bought by Microsoft and becoming MSNTV after proving that customers would interact with their TVs if given the chance. The product generated $1.3 billion in revenue during its first eight years in the market despite being very basic nowadays due to email having become so popular; before Hotmail was founded in 1996, many people believed that email accounts were always going to be something you got from your employer.