"Shotgun" Entrepreneurship

The Financial Times reports on a trend in entrepreneurship towards a "shotgun" approach to developing new business ideas:

The quest to develop the internet's next big thing can be full of unexpected twists and turns. PayPal, the online payments service, started as a way of transmitting payments securely between Palm Pilots. Its founders realised that there was an even bigger opportunity in online payments - and went on to sell the company to Ebay for $1.5bn (£767m).

Flickr, the photo website, grew out of a multiplayer online game being developed by its founders. Game Neverending never saw the light of day, but Flickr went on to be acquired by Yahoo, sparking a wave of interest in "Web 2.0" sites.

With such tales in mind, some entrepreneurs factor the unexpected into their business models, eschewing business plans that rely on a single big idea. Instead, they set up companies in which small teams of engineers work on several ideas simultaneously. The hope is that one or two will take off - a "shotgun" rather than a "sniper" strategy.

Unlike previous incubators like Idea-lab, which supported entrepreneurs who successfully pitched plans to Idea-lab, and which relied on venture funding and spun out successul firms as soon as possible, a few new entrepreneur shops like Ooga Labs develop their ideas in-house and are self-funded.  To foster teamwork, Ooga has a cross-equity ownership structure:  "We have five different companies at Ooga Labs and everyone owns equity in each of the projects regardless of which one they're focused on," says founder James Currier. 

Read the whole article here.

Posted by: Paul Rose