The Entrepreneurial Web

Prologue

When the spreadsheet had to go

In 1979, I bought an Apple II computer and a Visicalc spreadsheet program. I'd bought them on the advice of my accountant to enable me to create a business plan: a business plan that was to get me a one hundred and fifty thousand dollar loan.

My first impression had been that this system appeared to be some kind of elaborate calculator that could make calculations and lay out all the results in neat, orderly tables. But, I hadn't been working on the business plan for very long before I realised that a computer, with a spreadsheet program, had the potential to be something far more sophisticated than a calculator: it could provide a modelling environment for any kind of business idea I could come up with.

I also learned - by losing all of the one hundred and fifty thousand dollar loan - that spread sheet modelling is fallible. It can handle situations where conditions are reasonably stable and predictable, but, a model can be rendered totally useless by unknowns or unexpected turns of events. Despite this serious limitation, spreadsheets can still provide an invaluable aid to business planning as long as care is taken to keep away from situations that are totally unpredictable.

For nearly fifteen years, a computer and a spreadsheet program became an indispensable part of my business life; more than just tools, they became an extension to my brain. Whatever business ideas came into my mind, I could model them on the spreadsheet, try out different possibilities, test the risks, manipulate the cash flows.

In 1993, I discovered the Internet. At first, it seemed no more than a social recreation, but, as I began to explore the various news groups and list serve discussion forums it became apparent that this was far more than simply a social environment: it was a rich source of valuable information and business contacts. This had no real impact on me until the advent of the World Wide Web, then it dawned upon me that this was the start of a completely new way of doing business ­ with virtually limitless possibilities.

There was only one snag. This new environment was totally unpredictable: full of unknowns, unknowables and unexpected changes. In short, it rendered my spreadsheet program completely and utterly useless. For a businessman, this is on a par with suddenly becoming blind. Business is about planning and thinking ahead, yet, here was a business environment that precluded the use of any predictive modelling.

How then, with the obvious potential of the Internet and the World Wide Web, would it be possible to create a sensible business strategy in order to become a successful competitor in this new communication environment? It was an intriguing challenge.

A totally new world

Until I entered the digital world of electronic communications, I thought I'd learned to become a fairly shrewd and capable businessman. I'd joined the very first rush into the new technological revolution when CD-ROMs first came out. I got badly burned. The world of computers and digital communications was like nothing else I'd ever encountered before. There was too much change and too much information to deal with. I seemed to be back to square one, where I'd have to start learning how to do business all over again ­ from scratch.

As fast as I'd buy a piece of hardware, or a software application program, something new would come along and cause it to become out of date or redundant altogether. It wasn't simply the cost in money that was the problem, it was the time needed to get my head around the new dimensions that each new change introduced. Before very long I became totally confused because the amount I was needing to know and learn was spinning out of control. It was simply too much for me to keep up with. What I felt I had to do was to get off of the giddy roundabout of continuous change, step back and start from basics.

Fortunately, my educational background had been science and technology so I could get to grips with the theoretical issues. My specialities were electronic control mechanisms and systems theory; to these I'd added game theory and evolutionary biology. Mixed with a professional knowledge of marketing, finance and investment, these had seen me through many varied and exotic entrepreneurial adventures. I figured that this background was about as good as any for trying to find out what this new world of digital technology was really all about.

First I had to get at the very core of computer technology. This lead to a five year flirtation with the arcane world of computer programming. At the end of this time I began to get a glimmer of what this whole technological revolution was about and how it integrated with the realities of the everyday world of people.

In those five years, I produced two books that were a reflection of my learning process. The first explained the essence and power of computer programming: "Lingo Sorcery - the magic of lists, objects and intelligent agents". The second book, "Magical A-Life Avatars - a new paradigm for the Internet", expanded on the first, to explore how a programming environment in a computer memory could be used almost like an extension to the human brain ­ allowing humans to communicate more efficiently with each other.

By the time I'd got to grips with the fundamental concepts of computer and digital communication technology, the World Wide Web had exploded into being. For me this was especially exciting because I could combine my twenty years of entrepreneurial experience with the ten years I'd spent on the technological issues.

As I started to look around at what other people were doing, none of it was making any sense. I found a world being run by technologists, who were creating all kinds of clever and amusing tricks, but, hardly any of it relating to the fundamental principles of business and commerce. It was as if the whole world of digital communication had been given over to artists and programmers to play games at impressing each other with their cleverness. This wasn't so surprising really because the people with the expertise to create this new technological environment had spent so much time acquiring the necessary knowledge and skills that they simply hadn't had enough time to spend in the real world of commerce to learn how to apply it efficiently.

Usually, commercial guidance for technological advance is provided by astute entrepreneurs and professional managers who have the knowledge, experience and business acumen to prevent effort being wasted on impractical solutions. Unfortunately, most hard headed business people were so completely lost in the technology that they were either ignoring it altogether or handing over the reins to technologists who were, in the main, commercially naive.

Most perplexing of all, was the gold rush mentality of investors. As I'd spent some time in the City of London writing a correspondence course in investment and finance, I had a fair understanding of the basics of investments and what I observed was not investment in any sense of the word; it was out and out speculation with values being placed upon Internet based, start up businesses without any regard for fundamental values. Investment valuations seemed to be anticipating the most wildly optimistic scenarios with no attempt at all to discount any of the downside risks or the emergence of competition. It is at such times, when fools rush in, that vast fortunes can be made and lost.

I read everything I could lay my hands on. I subscribed to dozens of Internet discussion forums and newsletter services. I studied, multimedia techniques, Web site design technology, server side hardware and software solutions, back-end technology. At every turn, I ran into new chasms of information and "essential to know' knowledge. I looked at thousands of Web sites, studied many emerging Internet business strategies. For two years I ran around like a headless chicken, climbing one learning curve after another, drowning in a sea of information and getting nowhere.

Then the penny dropped. It wasn't about learning and technology at all. Neither was it about planning. It was about communication and game playing. It wasn't necessary to have to know everything because that was impossible. It was about being able to cope with the uncertainties and the complexities better than others. This needed a radically different way of thinking from the spreadsheet mentality I'd acquired in the world of bricks and mortar.

What the book is about and who it is for

When I first started to write this book, the publisher and the readers of the draft chapters would ask me "What is the target audience? Who are you writing this book for?". They were always a bit miffed when I told them that the target audience was me and I was writing the book for myself'. But, it was perfectly true. Writing this book gave me the opportunity to gather together all my thoughts from the experiences and knowledge I'd gained over the previous ten years of trying to understand what the digital world was all about.

What made my approach different from many others though is that the ten years I'd spent in the digital world came on top of over twenty years of experience I'd had as a pragmatic entrepreneur. Contrary to the stereotyped image, the entrepreneur is just as much a skilled practitioner as any technical expert and like any speciality profession the expertise is acquired as a result of much practical experience.

Unlike conventional specialists and technicians though, an entrepreneur has to avoid most technicalities and detail in order to be able to concentrate on more abstract issues ­ those involved with the higher levels of system functioning and organisation. This is a woolly world where there are no logical answers to problems, no boiler plate solutions. It is a world of change and competition; where success isn't about knowing all the right answers but about making more intelligent guesses than others.

There are innumerable magazine articles and books written about digital technology, e-business and e-commerce. This published information is dwarfed by the amout of information available on the Web. It's impossible to even estimate the extent of all this knowledge let alone absorb it. What makes things even worse is that so much of the information is contradictory. Seemingly, there are few general agreements on any issues. As if that isn't bad enough, technology, techniques and recommended business strategies are changing so fast that whatever is read is almost always certain to be out of date by the time anyone gets around to understanding and applying it.

To my entrepreneurial mind, it seemed common sense that nobody could ever hope to understand what the world of digital communication is about by trying to delve into this morass of unstable information. The only route to understanding would have to come through creating a practical working model in your mind that could be used to rise above the detail. Only in this way would it be possible to make pragmatic decisions.

Every successful entrepreneur I've ever know has worked this way. They rise above the detail -­ which they leave to hired helpers ­ in order to concentrate upon the broader issues. From this high level view of the world, they create simple, rule of thumb formulae that can be used as the basis for decision making. These loose strategies then become the engines for their success. This book is about trying to create such an engine: an abstract model that can be used to guide decision making in the seemingly incomprehensible world of digital technology.