Facebook is best known, but other upstarts -- from Minecraft to Rovio -- are reinventing the content and marketing world
The age of the big, corporate media creator is over, and that of the small, nimble start-up has begun. The Web will look different; people will spend their time differently, and the old ways of doing things will no longer suffice. Companies now emerge from nowhere with no money, yet garner millions of users almost overnight. The implications for those in content and marketing are immense.
Companies that were started with astonishing ease by passionate people are emerging in gaming, travel, art, transportation, news, and media and advertising itself. They use generic technology and tools, often paying nothing for the open-source software at the core of their products, and rent their back-end computer resources by the month from companies like Amazon and salesforce.com. Almost unlimited investment capital is available for these startups, both from traditional venture-capital firms and angel investors. But often they don't even need a great deal of money. It simply doesn't cost much to be an entrepreneur anymore, nor do you need to be a coder to start a tech business.
Facebook chief technology officer Bret Taylor recently summarized the current landscape: "Today the Internet is an interactive social experience, defined by a person's connections, interests and communities," he said at a U.S. Senate hearing. "And thanks to the explosive growth of smartphones and mobile applications, people can access this personalized, social Web wherever and whenever they want."
It's the age of the empowered individual, who wields these ever-evolving personal tools - social software on an often-mobile computer - with increasing deftness. You may recognize yourself in this description - do you wield an iPhone or an Android? But a fundamental mismatch has emerged between empowered people with high expectations and big companies that too often still operate as if customers remained the passive "consumers" of yore. Leaping into the opportunity created by this mismatch are fleet-footed new companies, often operated by people who closely resemble those consumers.
Nothing exemplifies the new business landscape better than Facebook itself, which 19-year-old Mark Zuckerberg launched with virtually no capital in that legendary Harvard dorm room. The site passed 500,000 active users in 2004 before the company, then called thefacebook.com, raised any significant outside investment. Today, of course, the success of this once-bootstrap startup is so gigantic that some might say it has become a colossal, corporate media company. Over 700 million users worldwide spend time regularly on Facebook, and the company's platform extends across other Internet platforms. Facebook is a fundamentally new communications medium, and the time and attention 150 million Americans spend there is exceeded only by television.
As Facebook's success spawns more bootstrap media start-ups, it has achieved the rare status of a new platform for applications created by others. It is starting to rival the very Internet itself, since, by some estimates, as much as 35 percent of all Internet activity worldwide now takes place within Facebook. A new form of content distribution has arisen, including not only Facebook but also Apple's iOS platform for the iPhone and iPad, and Google's skyrocketing Android.
Empowered people want to help create their own media experience. The extraordinarily successful new game Minecraft invites users to build the environment in which they encounter obstacles and battle enemies. This extraordinary product was invented by one guy in Stockholm - Markus Persson. He didn't even have a company until more than a year after releasing the "alpha" version of Minecraft. Hundreds of thousands purchased and played it, while enthusiastic reviews poured in. There was no advertising. Promotion was word-of-mouth.
Persson, by now heading the fledgling company, Mojang, unveiled a "beta" version in December 2010. In less than a month, total sales had reached more than a million units. By late April 2011, more than a million more people had paid 15 euros to buy it. Persson says Mojang has total sales of 23 million euros, 2.3 million paying customers and, including its free version, over 8.2 million registered users. Mojang has a mere nine employees. Revenue is now gushing in at the rate of $25,000 (U.S.) per day.
Minecraft still has one traditional element - it is a downloaded application you install on your computer desktop (though a mobile version is promised soon). But many new companies could not have emerged until the age of the smartphone. Uber is a good example. Aiming to transform local, personal transportation, this iOS and Android app lets users tap their location on their phone's map.
Uber then sends a car to them, usually within minutes. They can also watch their driver's progress on the map.
Matt Cohler, a venture capitalist at Benchmark who has invested in Uber, calls it, "the best example I've seen of a totally compelling new consumer service that would never have been possible before smartphones." Uber is already operating in New York and San Francisco, and plans to expand quickly. Is Uber just a transportation service? Is staring at the screen while you're waiting for a car a media experience? Could it be accompanied by ads? Why not?
Some 24-year-olds are more directly targeting traditional media. A little company called YouAreTV aims to reconceive television for an empowered, interactive age. In the process, it might revive "appointment TV" and undermine - at least some of the time - the relevance of that earlier technology disrupter, the DVR.
YouAreTV emerged from another start-up, collegeonly.com. Begun by Princeton undergraduates, collegeonly.com was an attempt to recreate the appeal of the early Facebook, when it was only targeted to campuses. The attentive founders observed that a live video feature was especially popular, so they pivoted toward that and spun it out as a new company. Youare.tv remains in semi-stealth mode, but it essentially invites "viewers" to compete in real time for the chance to appear live in an on-screen game show. (For now it works on Macs and PCs, or any device with a browser that works with Flash.) Major media companies have come calling, and YouAreTV's investors include Facebook board member Peter Thiel. The company works out of a crowded, co-working incubator space called General Assembly near New York's Union Square, surrounded by other 24-year-olds working on start-ups with a wide range of media-related goals.
Turning part of the process over to customers seems at the root of a surprising number of new companies. Some aim at the fund-raising process, both on behalf of for-profit and nonprofit ventures. New York start-up Kickstarter, for example, helps creative people solicit donations to produce films, Web sites, dance performances, public art projects, literary periodicals or anything else somebody thinks up.
The company takes 5 percent and insures no money goes to the recipient until the full amount requested has been raised. However, individual donors are responsible (or, if you prefer, empowered) to decide which projects merit funding based on the creators' pitches.
Other new businesses presume a democratization of markets that formerly were the province of elites. One example is 20x200.com, an online business launched by New York art dealer Jen Bekman. The company publishes original art prints in editions of 200, for $20 per print. Bekman's ambition is to expand the art market and make it open to everyone. She explained in an interview with the Murketing blog: "I see these $20 prints as the gateway drug of the art-buying world. The first one might not be for free, but it's damn close... I want more artists to make their living making art, and I want the people who want to buy art - but feel that it's too rarefied for them - to actually buy it." The existence of the Internet as a universal pathway to the public makes that possible. In the new world of individuals empowered by technology, everyone can be a TV star on youare.tv, and everyone can collect art at 20x200.com.
These rapidly emerging start-ups with populist ambitions have profound implications for industry incumbents. Just look at the biggest recent global entertainment phenomenon - the cell phone game Angry Birds. Like Minecraft, it was created by one guy, this time in Finland. Today more than 200 million people worldwide use the app on their smartphones or iPads to catapult rotund avian weapons at recalcitrant pigs hiding in complex pyramids. The game is so popular that the company that makes it, Finland's Rovio, is furiously licensing content for a book that emerges this summer, as well as for lunchboxes and toys.
Rovio's content has become so ubiquitous in pop culture that Business Insider recently declared that Disney should acquire it to avoid the cannibalization of its own business. Wrote BI's Pascal-Emmanuel Gobry: "Disney and Rovio are in the same business ... Rovio built an amazingly beloved, global brand in a record-short amount of time, and [is] already busy monetizing it through awesome merchandising deals." Rovio has many qualities in common with Pixar, which Disney bought not long ago.
Who had even heard of Rovio a year ago? Who thought TV would move onto the PC? Who thought a 19-year-old would create the most popular communications and media product in history? None of us can predict what happens next, but whatever it is, it will be very different than what we have been used to until now.