Small is The New Big

from GigaOM by Om Malik Here are my Three Rules for the new technology enabled company:

1. Involve your customer: Spreadshirt and Threadless work because they allow customers to create, design and customize their own T-shirts, instead of buying off-the-shelf stuff.

2. Your customer is your ultimate salesperson: Moo grew by tapping into and riding on the backs of special interest groups and social networks. Every time a customer hands out a card, Moo gets free marketing.

3. Serve your customer: If you want to play at cost arbitrage, as CastingWords does, make sure your service is high on convenience as well as low on price. This has been the case for centuries, why should the new millennium be any different.

Richard Moross, a twenty-something Londoner, was bored with the business cards most people were exchanging. He decided to do something about it. He started Moo Prints, a 10-person start-up that takes images from popular websites, like Flickr and Bebo, and prints them on cards that are exactly half the height (28mm x 70mm) of a regular business card.

Size alone makes Moo cards memorable. Moross cleverly dubbed them “mini-cards,” leveraging a marketing trend that’s already been über-successful in selling autos and iPods. Better still, Moo minis are highly personalized. For instance, Moross will take photos from your Flickr account and print it on your cards.

Getting your Moo cards is simple—sign up for the service, fill out your contact details, add your Flickr ID, and 10 days later 100 cards show up. All in, a set of Moo minis sets you back just $5.

Thanks to their size, Moo minis are cheaper to print than typical calling cards. The company prints its cards on an industrial strength laser printer made by Hewlett-Packard. But Moross juices his profits in other ways as well. Because Moo works with existing communities (and social networks) such as Skype, Habbo Hotel, Bebo, Second Life and Flickr, the company has built a sizeable following without spending a dime on marketing.

Which brings me to my point: Moo is among the first wave of young businesses finally putting the so called Web 2.0 technologies to work to make good on the promise that this much-ballyhooed generation of start-ups has been vapidly pledging for far too long: that Web2.0 would reinvent the boring, the old fashioned and the antiquated.

Don’t get me wrong. No stretch of imagination could conjure Moo into a technology business. No, no. Moo is a technology-enabled business. Forget patent-protected code (thank you, Justices of The Supreme Court!) or over-designed hardware. Moo is the epitome of a business that has truly harnessed Web2.0.

Several others companies fit the bill, too. Among them: Germany-based t-shirt maker Spreadshirt; Chicago-based Skinny Corp; and San Francisco-based 8020 Publishing, publishers of the JPG magazine. And CastingWords, which offers a transcription service based entirely on the web. In each case, the basic work product of these companies is no different from that of their traditional predecessors. (A T-shirt is a T-shirt. A business card is still a business card.) These young businesses are not inventing new things that distinguish them. It is the way they are using technology to execute and interface with their customers that makes them special.

I tape an interview with you and upload an MP3 file of our conversation to the CastingWords website. CastingWords puts the job of transcribing our chat to an open auction among its pool of pre-approved transcribers—people who might be dispersed over the world. The low bid wins, and a few days later I receive our transcript in the mail, for a fraction of what it once cost me to have the same chore done by a local service in San Francisco.

Companies like CastingWords are riding the crest of a wave of change that is only going to gather more momentum – and fast. Now any businesses can be reinvented with Web2.0 technologies.

You might be wondering, haven’t we heard this story before? Like ten years ago, when the commercial Internet hit its stride, when many brick-and-mortar businesses set up dot-com shops. But this didn’t trickle down to the little guys, to the small businesses that constitute the bell of the curve of the U.S. economy. This is one of the reasons why most new start-ups from the 1990s, like Amazon, had to spend hundreds of millions to compete with the older, established and large players.

Small and specialized entrepreneurs, such as the printer who specializes in business cards, or the graphic artists who open a T-shirt company, could never have possessed enough scale to make Web-enabling them attractive, or to attract the kind of investment or professional money that might have been necessary to do so. Size mattered.

But no more. Now that Web 2.0 is growing up, scale no longer matters. Even tiny businesses—like transcription services—can go global.

Today the same productivity gains enjoyed by large corporations in the ’90s are available to anyone for a few hundred bucks a year. A couple of hundred for a CRM suite, Google Apps for $50 a year, financial software for less than $10 a month – the cost of running an online business is a few thousand dollars.

The refined service of product customization popularized by Dell Computer no longer has to cost you millions. Today, a few hundred dollars buys you a slick and highly interactive site that is backed up with open source software and cheap hosting. Drive your labor costs with oDesk, which makes it easy to find talented programmers on the cheap.

Web APIs offered by the Google, eBay, or Amazon make once mundane and expensive business processes cheap. Store your customer data on Amazon’s S3 storage service; buy computer [processing] power on demand via Amazon EC2. Don’t want to manage your own inventory (why would you!?), shipping companies like FedEx and UPS or even Amazon, will do it for you.

In other words, today you can work like you are as big as a Fortune 500 company, without incurring 1/500th of the costs. It’s like looking in the rear view mirror: objects may seem bigger than they really are!

But before you decide to chuck your boring day job to start a new Web2.0 business, remember that in this generation—even more than in past business eras—everything about your business, and I mean everything from operations to marketing, must revolve around the customer.

Here are my Three Rules for the new technology enabled company:

1. Involve your customer: Spreadshirt and Threadless work because they allow customers to create, design and customize their own T-shirts, instead of buying off-the-shelf stuff.

2. Your customer is your ultimate salesperson: Moo grew by tapping into and riding on the backs of special interest groups and social networks. Every time a customer hands out a card, Moo gets free marketing.

3. Serve your customer: If you want to play at cost arbitrage, as CastingWords does, make sure your service is high on convenience as well as low on price. This has been the case for centuries, why should the new millennium be any different.

So what are you waiting around for… time to start something new! Or old, for that matter.