The biggest occupational trend in the restructuring of the economy has been the newly minted entrepreneur. The media regales us with stories about the new startup incubators like Y Combinator, and the success stories of their progeny. All roads to developing a new business point to leveraging the Internet with some sort of social, commercial or mobile business model.

All new entrepreneurs face five hurdles in developing a new online business:

1. Business model. The first step is the hardest. You need to fix a problem, and it’s best to leverage your previous work experience to identify the problem and craft a solution.
2. Programming – what does the app look like and do? The second step is just as daunting as the first.
3. Creating the simple business plan and timeline. The faster to execution, the better.
4. Funding. How to bootstrap this? You won’t likely have a network set up to reach VCs and other institutional investors, but crowdfunding may be viable.
5. Go to market strategy. Execution of course is the most critical step to success.

1. Business model: Identifying the problem.

1. First timers should start local. It’s easier to build traction when focused on a small arena.
2. Building a service is easier than a product (but remember, VCs and investors generally shy away from service businesses because they are hard to scale). The most alluring aspect of building an online product like Instagram or Pinterest, is the potential to explode. Unless you have access to programming or funding, don’t try building a product. One exception is to clone a product idea for the local market using third party services that provide “plug and play” white label templates, like Chompon for building Daily Deals businesses.
3. Use your local network and past experience. For example, there is now a huge window of opportunity to help local businesses develop social marketing expertise on a turnkey basis. If you have established a local network, you can build this service business like Apsides Media Group and Socially Now by partnering with turnkey social media solutions providers. (Note: we help to build these kinds of businesses).

2. Programming

1. Chances are the new entrepreneur has no experience on the Internet beyond buying stuff at Amazon. Hiring a programmer is a major challenge because you don’t know how to create a spec, and it’s impossible to tell if the programmer is good and the price is right. The best way to build the web service is to teach yourself WordPress or use Tumblr to create a simple model of what you want. That’s your homework. I believe building the web service prototype yourself is important to understand how it will enable the business model.
2. The prototype can look clunky. It needs to reflect the business model, and you need to confirm with your peers and potential users/customers whether there is demand for your service. Iterate until it makes sense. Pivot if you’re going down the wrong track.

3. Create a simple business plan

1. The days of a 100-page business plan are over, unless you are the type who likes to do this. Business plans can be conceptually templated by taking hot or successful business models and applying them to new industries, geographies or service sectors. “Shared economy” or “collaborative consumption” business models are 2012′s buzz and can be implemented at a local level because most sharing requires physical proximity. Here’s a list of startups in this space. For example, if you know the hardware business, you could set up a city tool sharing model similar to Toolspinner.com.
2. One more great resource for new business models: The Unhyped New Areas in Internet and Mobile

5. Go to market strategy

1. Before launch, the web service will likely need some professional app development to make the user interface credible. It’s quite possible to continue to use WordPress, especially if you’re flexible to pivoting and plan to change messaging occasionally. By this stage, you should have developed a business plan that can potentially attract a team, including partners or co-founders who can help with technical development.
2. Your goal should be to prove that the business model is viable for a community. The execution stage is obviously critical, and in the next articles, we’ll look at various go to market strategies.

Through one of my new favorite “social discovery” services LetsLunch.com, I had the pleasure of lunch with Sarah Lacy. She brought me her latest book Brilliant Crazy Cocky, a tome to the universal entrepreneurial spirit in six countries she surveyed last year. I read most of it over the weekend (and recommend it highly).

One point Sarah made at lunch (and I’ve always wanted to hear) is the inherent contradiction that startup incubators weren’t the best places for entrepreneurial companies, and therefore, entrepreneurs themselves. The most overt supporting evidence is that even the most visible incubators haven’t launched billion dollar companies. The assumption Sarah makes, and chronicles in her book, is entrepreneurs thrive best in the “wild” where they work within distinct, even foreboding parameters, financial and institutional, that require creative thinking and networking to reach next levels.

Incubators provide a nominal financial safety net and prescribe a blanket strategic system for building a startup, and this fosters a kind of groupthink. For example, ever been to a tech conference like Web 2.0 and baffled by how little you learn listening to tech pundits who haven’t applied their practices to a real business? I learn more from real estate technology conferences about how to implement practical solutions. Incubators tend to be run (and overrun) by younger technophiles, and there may be a gap between the products they build and the users they serve because the institutional connections to the real world business or industry may be lacking. In earlier eras, MBA programs have been criticized for inculcating academic business cultures to 20-somethings that were similarly pragmatic only to the point of getting into McKinsey or Goldman.

And now we see similar arguments about how college education is overpriced based on the perceived return of investment on the cachet of an Ivy League degree versus the real life return. Over the weekend, Sarah discusses how Peter Thiel believes college education has become overvalued due to the trade off problem of a huge student debt burden for the implied earning potential value of a name brand degree. Pursuing a Stanford degree and getting into Y-Combinator are prestigious, but if it instills an attitude of entitlement and creates an environment in which hard work becomes secondary to playing the “game”, then the goal of contributing meaningfully to society might get diluted. Peter Thiel’s proposed solution is to bypass the four year college process by offering smart kids $100,000 over two years to start companies. Throw them into the “wild”.

Yes, these are three examples on the value of their particular brand of education – the MBA, the incubator, and the Ivy League degree – but it all points to the larger picture that education in today’s world, where everything is changing much faster than any textbook re-edit, needs to also adapt just as quickly to be relevant. I think Sarah and Peter are on to something with their concept that baptism by fire may be the best educational route for young entrepreneurs.

What’s missing from sites focused on a city? Community organizers. It’s the same leadership dilemma facing any organization, whether physical or virtual. Hyperlocal sites need to be driven and organized by hubs and influencers of the local community, and these hubs need to feel invested and committed to their “city site”.

Hyperlocal “news” sites like Outside.In and Topix automatically pull feeds from local publishers to re-create a local newspaper. Although there are sporadic comments to articles, there is little community engagement. CitySearch and Yahoo! Local serve as online Yellow Pages.

Engaging hyperlocal sites need “word of mouth”

In many cities, the best hyperlocal sites are developed by somebody, some company or group in the community. In Santa Barbara, Edhat.com, developed by a local software company, has distinguished itself in providing compelling local content.

Hyperlocal social networks a la Ning generally don’t gain traction (show me one that does) because it takes too long for anybody to invest the time to set up a complete profile. Twitter makes hyperlocal communication easy because it can serve as a proxy social network for a local community that “follows” each other. There’s no login/profile setup requirement, just tweet.

Breaking News City sites that aggregate local Twitter feeds across various categories are being developed in cities across the country by individuals, and groups like chambers of commerces, who are hubs of their communities. They invest their time to create a useful hyperlocal community site by providing local Twitterers a venue to gain exposure in the community. There’s energy in facilitating the community conversation that “national” sites like Topix and CitySearch don’t have.

Example Breaking News City sites:

President Obama staged an 80-minute interactive town hall meeting this morning at 11:30 EDT. In the span of an hour or so, he received 92,000 questions online, from which 3.6 million votes were cast voting up/down those questions.

Idea: his administration should create a “White House Connect” application based on a white label Google Friend or Facebook Connect type system. White House Connect could be set up as a governmental social network, that could be extended on national, state and local levels.

Benefits of an Obama Induced Online Society

President Obama has the opportunity to push American society online, with the following benefits to his wired administration:

1. Easier to broadcast messages to a tech savvy media and public, constituents who likely comprise a hotbed of Obama supporters.
2. Engages the public and gives them a feeling of connectedness with his administration.
3. Positions Obama as a populist president using a variety of media, from Jay Leno, to the internet, to communicate his messages as a “real” person, not somebody isolated in an inner sanctum.

In a similar vein, the South Korean government pushed its citizens after the 1998 Asian Financial Crisis to adopt broadband and the Internet, and became a global Internet powerhouse.

Tim O’Reilly’s comprehensive slideshow makes several points about the accelerating speed and syndication of information:

• The real time functionality of the new information distribution systems, elegantly demonstrated by Twitter, is critical to reporting.
• Social Networks facilitate content distribution, and media brands power content credibility

A key function of a publishing brand is the bestowal of status by what you pay attention to

• Advice to major brands like the New York Times: “build the platform and your customers and partners will build features before you do”. Note how the open source Twitter API spawned a riot of applications. The New York Times API, or other media brand APIs can potentially do the same thing – and leverage the content NYT creates and distributes.

Yes, I would like to see Tim’s narrative accompanying the keynote.

Why are print newspapers shutting down presses, and book publishers decrying where their readers went? Today’s NY Times essentially says this:

(Charts, of course, not based on actual statistics; for descriptive purposes only)

Consumers are increasingly avoiding newspapers — and books, too — because the text mode is now used so infrequently that it can feel like a burden. People are showing a clear preference for a fully formed video experience that comes ready to play on a screen, requiring nothing but our passive attention.

The video mode has been reinforced by the rise of YouTube. In December, almost 100 million viewers in the United States watched 5.9 billion YouTube videos, according to comScore. Tellingly, YouTube has not cannibalized TV viewership — it has instead carved out another chunk of our leisure time for video on a screen.

Yes, this is the virally active video du jour entitled “the History of the Internet“, but I think it’s remarkable explanation. It really explains the evolution of the internet as a electronic network phenomenon that evolved in parallel with telecommunications. Somebody had to explain all that geekiness in 8 minutes because it otherwise would be a dry academic read.

Few news media companies know how to effectively develop their social media resources; they still hide behind their call letters or mastheads and broadcast one way. Citizen journalists – in effect, the masses – are the closest to breaking news events and stories, so tapping into the social media is becoming the key to real time news sourcing. News producers, anchors, reporters and writers should leverage their media celebrity to build their social network standing and position themselves as the “hubs” for all news in their communities. After all, being the hub is the value proposition for any news organization and attracts audiences.

Domus Consulting Group has been a leader in educating the real estate industry on how to use the social media systematically to become hubs within their local community. The mainstream media have the exact same mission to reach out to their community.

We call our system the Social Broadcasting System and invite you to attend a free two-part webinar series specifically focused on demonstrating to producers, journalists and reporters. (And there is absolutely no upsell or even hint of it, we want to show you a revolutionary concept for media business and branding that will increase media market share and thus, revenue opportunities. We’ll show you new business models).

Session #1: Flight 1549, and the Mumbai and Gaza incidents demonstrated how powerful Twitter and citizen reporting has become for breaking news. Tips on the right ways to leverage Facebook and other social networks to reach your audience.
Session #2: How the Social Media and Mainstream Media are converging based on the new “Breaking News” reporting paradigm. Explaining a new business model: how to connect your news network into massive local social media infrastructures… efficiently and free.

Register for the Free 2-part Webinar Mini-Series

Dates:

* Session 1:  Tuesday, February 3, 2009 at 9am Pacific time
* Session 2:  Tuesday, February 10, 2009 at 9am Pacific time

About Pat Kitano

The Domus Consulting Mini-Series are for educating industries, organizations, companies and individuals who need an efficient and powerful online community presence. We started with the real estate industry, demonstrated how effective social media is in making real estate professionals hubs within their community, and are now offering the same methodology to the news media and to non-profit organizations.

Twitpic crashed this afternoon due to all the traffic from a now famous iPhone snapshot that Twitterer Janis Krums took of the crashed US Airways plane in the Hudson River.

Twitpic takes it place as THE breaking news image source. Why? It’s simple to use and has become a standard. In an extraordinary, emergency situation, citizen journalists have no time to figure out how to send their iPhone snapshots to CNN or any other media outlet. In fact, CNN should just buy or invest in Twitpic now.

Now that opportunistic programmers see the power of a Twitter app like Twitpic, expect development of a new set of apps that facilitate news gathering and reporting. For example, iPhone apps developed by news organizations like NYT might include a camera link that allows its users to send snapshots directly to the news organization.

One snapshot from a ferry spawns a 15-minute celebrity:

TODAY’S ONLINE CONTENT FATIGUE

Web 2.0 could be described as a phase in the evolution of the Internet that facilitated individuals in creating content within the constructs of social websites (blogs) and social networks (as participants). User-generated content was the New New Thing when it first appeared refreshingly on blogs (in 2002 blogs were being recognized as media), MySpace (2003), YouTube (2005) and Facebook (in 2006, it opened up beyond colleges).

Now, the discovery phase of Web 2.0 is over. Thinking bird’s eye level, all the content that needs to be online is now online. For example, there are literally thousands of articles (and videos) about how to raise your credit score, and using Google isn’t really going to help you find the best or most appropriate advice. Conclusion: content creation is now not as highly valued when it’s already ubiquitous and en masse.

However, one kind of content is still prized; it’s in the taglines of CNN and Huffington Post: “Breaking News“. Breaking news, in all its forms from reporting to analysis, holds the most social and economic value – world society reacts, trades and competes with New News.

MEDIA 2.5 – POSITIONING AS THE HUB OF BREAKING NEWS

The mainstream media finally figured out that journalist content creation also didn’t need to be salaried. Breaking news can now be reported by anybody in Mumbai or Gaza. Media measures its worth by traffic, and solidifying the market position of being the hub of Breaking News is where Media 2.5 is headed. That means having producers like CNN’s Tori Blase on Twitter‘s front lines receiving and monitoring news stories and alerts from her Twitter network. This reinforces CNN’s status as the breaking news hub when it has dispatches at the borders of citizen journalism. News sourcing is social, every news producer must do this to stay connected with the new citizen news sources and be relevant in the future.

WEB 2.5 – EMPOWERING WEB 2.0 INDIVIDUALS TO CREATE BREAKING NEWS MEDIA HUBS

The New New Media Properties have none of the mainstream media overhead and infrastructure for collecting breaking news – Huffington Post, Politico and video-based Funny or Die are the collaborative media that Web 2.0 facilitates. All they need are writers/video producers who want syndication, and what aspiring journalists/producers will turn that opportunity down? These sites have become talent agencies that trade talent exposure for content quality, and in turn elevates their online presence and traffic.

The window is open, but nobody sees it’s open yet. Any organization, company or even a team of like-minded individuals can now create Politico-type blog network/breaking news distribution properties cheaply by leveraging Web 2.0′s blog and website design applications. A key distinction needs to be made in developing a media property – the content being created and distributed must be quality controlled to attract traffic. Social networks built on platforms like Ning won’t work due to noise and content credibility arising from any yahoo who wants to be a participant. The mainstream media understands this distinction and have been augmenting their journalistic offering with a J-School trained blogger corps (examples: NYT, SFGate), basically trading in the name “column” for “blog”.

Web 2.0 facilitates individuals. Web 2.5 facilitates the development of collaborative websites. The real estate industry in particular can leverage Web 2.0 tools to create collaborative websites that position real estate agents as local “reporters”. Properties like Homescopes leverage Web 2.0-savvy real estate professionals to break local news like the details of recent home sales only they would know about. Seth Godin mentions today that real estate brokerages should create local e-newsletters… this idea aligns with the idea of real estate agent as reporter.

You wouldn’t buy GM stock today without checking Marketwatch.com, and consumers will soon understand they won’t put an offer on a house (in this weird market!) based on month-old data. Breaking news is the killer app.

WEB 2.5 – LEVERAGING THE MEDIA HUB TO ATTRACT TRAFFIC (AND ONLINE FAME)

If you want evidence that content creation is taking a back seat to content distribution, see Justin.TV, an online streaming media application initially launched to allow the masses to chronicle their lives in video. Unfortunately, most people’s 24-by-7 lives are excruciatingly boring, and Justin.TV has evolved into the leading do-it-yourself online Cable Access channel network that facilitates anybody who wants to “program” online TV. Naturally, the most in-demand content are the free broadcasts of subscription streams of sporting events and movies… value-based content is king.

And just so content creators won’t complain that I’m positing the “death of content”, on the contrary, good content creators will now flourish, and gain access to exposure and fame much more easily with the proliferation of the new Web 2.5 content distribution channels (and let’s just call them media).

Media hubs/channels are the antidote to content fatigue by facilitating relevant filtering for discovery of great stuff. Guy Kawasaki’s Alltop and Jason Calacanis’ Mahalo are based on nothing more than the collaborative insights of what is online good “breaking news” content. Somewhat autocratic, but a simple formula. It’s no coincidence that both Guy and Jason have attuned themselves to real time trends as well-networked Twitter celebs.

What I’m trying to say is – the opportunity is build these media hubs is wide open and easy to do… the challenge is to convince your network to participate in your hub. This is the spirit of post-Web 2.0.