If you list some of the most popular and important companies on the
internet today, you’ll notice that most have one thing in common: they
offer an API. And, in most cases, for good reason. APIs can be a
valuable asset for an internet business.

But is an API a business development asset, and over time, should it cannibalize business development?

Shaival Shah, who is VP of Business Development at Hunch, thinks so. In a post on his blog, he writes:

When I joined Hunch, Chris Dixon asked me what my goal would be and more importantly, how I would know if I achieved success. My response was to cannabilize my own function by popularizing the Hunch API into the wild. It was a simple lesson that I learned from Alan Spoon, former President of the Washington Post Company and Managing Partner at Polaris Venture Partners, who once told me that companies don’t move aggressively enough to cannabilize their business, but rather spend too much time trying to defend it.

Shah offers up some really good advice about growing an API’s presence in the market. For instance, he suggests that, at least in the beginning, a self-service API will still realistically require some one-one-one deals. He also recommends a “Bowling Pin Strategy” in which outreach is targeted at a “neighborhood of companies within an ecosystem.” The goal there: by targeting a vertical, it’s easier to build a brand. Finally, Shah reminds companies of the importance of knowing the metrics your API is designed to boost.

But some of Shah’s advice is, in my opinion, a bit off the mark. Most notably, Shah that “validation, PR and analytics” trump revenue. “Revenue will follow if you solve for those three missing variables,” he writes. That’s not, however, necessarily true. Here’s why:

• Validation means different things to different people. But ‘validating‘ the market for an API is different from ‘validating‘ a business model. There are plenty of popular APIs offered up by companies that have failed to validate that they have what it takes to make it as real businesses. Twitter, anyone? Unfortunately, far too many new businesses fail to recognize the importance of testing out business models and determining if there’s real market support for them as early as possible in the company’s lifecycle.
• PR is no doubt important for companies, but it hardly guarantees revenue. Plenty of startups have received boatloads of press attention but still failed to generate substantial revenue. And for good reason: popularity without a viable business model is just, well, popularity. Driving a million people to your website certainly won’t be profitable if there’s no business model in place to take advantage of the popularity.
• Many companies collect lots and lots of analytics data, but they either don’t know what to do with it, or they focus in on the wrong data points. Analytics can help companies better understand how their users are using their products, which can help them build better business models, but again, the business model is the key. Analytics for analytic’s sake isn’t helpful.

At the end of the day, I think most startups should draw a distinction between true business development and their APIs. The goal of business development is, by definition, to help develop business. If a startup, however, really isn’t yet a business (eg. an entity that has revenue or a model for potentially generating revenue), an API designed to deliver “validation, PR and analytics” isn’t likely to constitute a business development asset, at least in the near term. In other words, a company without a business model isn’t likely to magically to morph into a going concern simply thanks to a cool API. Thus, promoting the API is more accurately described as a marketing or product development activity at this stage of the game.

Of course, a company might focus on building up a wildly-popular API that itself could one day drive revenue through some unknown business model, but that’s sort of like opening a jumping off a diving board blindfolded and hoping that there’s water in the pool.

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The fear of losing business is stopping many SMEs from chasing bad debt.

A study by online debt recovery service Positive Collections, which surveyed more than 260 business professionals, found that SMEs are the most prone to suffer from late payers, with 74 per cent stating that they are likely to accept late payment excuses.

Interestingly, businesses with one to nine employees are less likely to worry about debt recovery, as 45 per cent claim they are always paid on time.

According to the survey, 17 per cent of businesses would try to chase debts but avoid legal action as they believe it will be too expensive.

David Green, CEO of online debt recovery service Positive Collections, says: ‘The fact that so many businesses in the UK have become accepting of this late payment culture is certainly a cause for concern as this has implications on the whole business community and economy.’

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As great as Richard Branson has been for championing entrepreneurship in the UK, it can’t be right that he still remains this country’s epitome of the successful, independent businessman.

There were over 260 responses to SmallBusiness.co.uk’s latest poll on the most inspirational success stories from the world of business. Branson’s Virgin came top with 43 per cent, followed by Steve Job’s Apple (17 per cent), while Alan Sugar’s Amstrad mustered 4 per cent.

In the UK, we’re still lacking that next generation of mega successful entrepreneurs. Julie and Steve Pankhurst became millionaires through their website Friends Reunited, but across the pond Mark Zuckerberg took social networking to the next level with Facebook. He’s a billionaire at the age 26.

At a conference not so long ago, the chairman of an online business from China told the audience: ‘Where are your new, successful entrepreneurs? Whenever you talk about entrepreneurs in the UK, all I hear is Richard Branson. Who is the next Branson?’

It’s a fair point. Perhaps it’s a cultural, British thing. Over the past couple of decades, there has been a huge amount of risk or even a stigma associated with starting your own business. Why put yourself on the line when you can train to become an accountant, teacher or go and work for a law firm?

Nowadays these professions don’t seem quite as secure. At long last, we might get some fresher entrepreneurial faces coming on the scene as younger people realise they have nothing to lose by registering a business with Companies House. After all, they could just as easily spend thousands of pounds training for a career that never really happens.

The UK’s triumvirate of successful entrepreneurs  – namely Branson, Sugar and James Dyson – all started their business before the age of 25. A recent survey showed that many students graduating over the next couple of years plan to start a business rather than become a salaried employee.

So maybe it won’t be too long before Branson can step down from the entrepreneurial throne and someone else can be the point of reference for showing others how it can be done.

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If there’s a sexy space on the consumer internet right now, group buying is it. Although there are arguments about whether or not market leader Groupon’s first national deal with Gap was really as successful as it appears on the surface, one thing is for sure: companies large and small smell big money in group buying deals.

One of those companies is Yelp, and although it has plenty of competition, Yelp may be one of the few upstarts with the potential to put a dent, even if slight, in Groupon’s rise.

Although Yelp is still testing it out on a limited basis, Yelp Deals is clearly modeled on Groupon. In short, there’s a deal for a local business that lasts one day. Simple, but profitable for the most highly-trafficked group buying websites.

But while many different kinds of companies, including newspapers, are looking to exploit the group buying model, Yelp’s advantage is its
strong following is key cities — cities where Groupon also happens to be extremely
popular. And unlike Groupon, which largely has a one-to-one relationship with its subscribers/customers, Yelp is a full-fledged community.

That, in theory, means that Yelp has the opportunity to build stronger relationships with Yelp Deals buyers, as they’re using already Yelp on a regular basis to find and review local businesses.

Additionally, Yelp has a potential SEO advantage: it is promoting deals on reviews pages, and these pages often rank very highly. So someone doing a search for a specific restaurant, for instance, might find a Yelp reviews page for the restaurant on the day a deal is being promoted. That, of course, could conceivably lead to a few sales.

Even with its potential advantages, however, Yelp will still face some significant challenges in making a splash in this market. For one, it’s getting a late start. But even more importantly, it’s audience may not be a good fit for local businesses. After all, if Yelp Deals provides bargains at already-popular local businesses, those local businesses may find that Yelp isn’t really delivering new customers insomuch as it’s delivering repeat customers who welcome the opportunity to pay less for what they’d buy anyway.

Finally, as with Yelp’s increasing list of commercial relationships and initiatives, it remains to be seen whether Yelp Deals could harm the perception that Yelp is independent forum for consumers to review local businesses.

At the end of the day, one thing is clear: group buying offerings will continue to proliferate on a variety of different kinds of online services. Those like Yelp, which already have a local focus and a large audience, may have the greatest opportunity to get a piece of an expanding pie, but what type of audiences will deliver the greatest ROI for all parties involved still remains to be seen.

Posts from the Econsultancy blog

Not so long ago a government report concluded that two-thirds of employers felt that 16-year old school leavers were well prepared for work. To my mind, that didn’t sound right. From personal experience I know that hiring graduates, let alone school leavers, can result in some pretty scary discoveries about missing skills.

Small business owners clearly have their reservations too when it comes to the skills and training gap. Our latest poll asked whether young people are trained adequately for the world of work and the overwhelming answer was ‘no’ (46 per cent). Of the 205 respondents, 19 per cent said that basic skills are lacking; 18 per cent had to invest in training and only 17 per cent were happy about the readiness of young people to go on the payroll.

If the soaring pass rates at GCSEs and A-Levels aren’t forging the right skills for the workplace, then perhaps employers should be looking at older workers. The default retirement age of 65, which is due to be abolished by October next year, will open another pool of workers for employers who can contribute some real value to a business through sharing their experience and knowledge.

In late 2006, the number of 55-64 year olds in the UK workforce outnumbered 16-24 year olds for the first time. I suspect that more people in their fifties are going to extend their ambition beyond working for someone else and will look to start their own business.

People like Simeone Salik, who is 68 and has big plans for her affordable, temporary blinds company, Blindsinabox. ‘All the media is interested in is keeping older people in work for other people, rather than for themselves. Older entrepreneurs should be encouraged as often they have less to lose in that they own their own homes and understand financial implications,’ she says.

Salik is a prime example of how the modern-day workforce is evolving – it’s certainly a far cry from the notion of the gentle, cosy retirement of yesteryear. That said, it doesn’t address the skills gap among a younger generation and an education system that, from an employer’s perspective, has long rendered academic achievement virtually meaningless in many sectors.

Click here to take our poll: Would you hire someone over 60?

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