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Smart Start-Ups: Profit by starting online communities

Intrigued by all the excitement about online social networks? Are you frustrated by the amazing success of apparently simple ideas -- photo and video sharing with Flickr and YouTube, online communities like MySpace and Facebook, tech tidbits like digg and reddit, online virtual shared worlds like Second Life, and now mobile micro-communication like Twitter? Do you have a hot idea like these that could explode into a Web 2.0 business?

If so, David Silver wants to help -- with his new book, Smart Start-Ups: How Entrepreneurs and Corporations Can Profit by Starting Online Communities (www.smartstart-ups.com).

Silver is the founder of Santa Fe Capital Group, an angel capital firm, and the author of thirty books on entrepreneurship and finance. He has been funding high-tech start-ups for the past three decades, and is looking for more. He doesn't want to start a new company, he wants to help you to do so -- and has written this book to flush out more good ideas to fund.

Smart Start-Ups starts with an explanation for understanding the opportunities of online communities, plus details and sage advice for evaluating and starting a new venture, including Silver's formula for evaluating business opportunities.

The second half of the book then elaborates specific examples of business opportunities just waiting to be created, with 19 chapters of start-up ideas, from specific markets like travel, art, and college sports, to meta-businesses managing online virtual money and arbitrating online disputes.

    Find Smart Start-Ups on Amazon.com

Contents and more details below ...

Silver's focus in Smart Start-Ups is on developing communities based on common interest. He uses established companies to demonstrate that you can sell something of little apparent value by building an environment that encourages people to come together and share -- Tupperware and Mary Kay Cosmetics (pay to buy products in the home), Weight Watchers (pay to weigh yourself), the New York Stock Exchange (pay millions to sell to others), and even Billy Graham (pay for prayer).

Online communities then offer a new approach for the same kind of opportunities for people to come together with shared interests. They threaten entrenched companies with a loss of control to the crowd. And they promise opportunities for new entrepreneurs because they can be started without relying so much on venture capital, and instead tapping Silver's world of angel funding.

Silver advises starting small and bootstrapping, focusing on ongoing revenues including front-loaded subscription fees and partnerships with affinity groups. He's not a big fan of relying on fickle advertising revenues to make a business. He then focuses on driving growth through viral and community marketing, and advises keeping a low profile to avoid alienating your developing community by bragging about your own personal success.

He concludes the first half of the book with an extensive discussion of developing a successful business model and then raising capital. He uses Silver’s First Law of Entrepreneurship to judge a business opportunity and then to evaluate the examples in the second half of the book (see his Online Scoring and Evaluation System, www.smartstart-ups.com/scoring.html):

    V = P x S x E

i.e., Valuation (V) is equal to the size of the problem (P) that you have identified, times the elegance of the solution (S) that will be sold to those who have the problem, times the judgment of the entrepreneurial team (E).

Smart Start-Ups:
    How Entrepreneurs and Corporations Can Profit by Starting Online Communities

by David Silver

Wiley, May 18, 2007, $24.95
    Hardcover, 252 pages, ISBN 0470107421


Chapter 1. Introduction
Chapter 2. Collaborative Participation
Chapter 3. Transfer of Control
Chapter 4. The Function of Cooperation
Chapter 5. Appear to Lack Money
Chapter 6. Rules for Creating Successful Business Models
Chapter 7. Raising Capital
Chapter 8. How to Launch a New Product

Chapter 9. Foreign Exchange Market
Chapter 10. The Metaverse Arbitration Association
Chapter 11. Rent a Judge
Chapter 12. Publishing and Convention Management
Chapter 13. Taking Back the Automobile Market
Chapter 14. Mission Statement Rewriting
Chapter 15. Mocketeering
Chapter 16. Launching a New Hotel Chain Through an Online Community
Chapter 17. Medical Research
Chapter 18. Life Insurance
Chapter 19. Replacing Advertising with Reputation Management
Chapter 20. Community for Ardent Fans of College Sports
Chapter 21. A Community of Art Dealers
Chapter 22. A group Travel Community
Chapter 23. Partnering with Giant Corporations
Chapter 24. My ThirdPlace.com
Chapter 25. IllegitimatiNonCarborundum.com
Chapter 26. Reputation management
Chapter 27. The Association of Mobile and Online Communities

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