I wrote this article after having been involved with — as employee, management, or consultant — a number of (mostly) Internet startups over the past decade. You see a lot of the same patterns and thinking no matter where you go and who you talk to. Even though the landscape of the Internet has changed significantly since 1995, much of the thinking behind what makes something successful online has not. As a psychologist, you’re trained to observe patterns in human behavior. I’ve learned to pair that training with examining patterns in company and Internet behavior as well.

Before you understand what it takes to create a successful startup Internet venture, it’s important to examine some recent trends in the online world. These trends help guide us in what may be a successful enterprise, long before we take the first step down the startup road.

In days of yore, say, oh, 3 years ago, websites were largely creations of either an organization or company, or an individual. There was a fairly well-defined line between these two types of websites, and rarely did they intersect.

This circumstance changed with the intersection of a number of trends and technologies, all centered around people being empowered by their own thoughts and ideas. Marketing and business folks call this “user-generated content.” This is typical business-speak for anything that the company or organization hasn’t created on their own.

Typified by blogs, podcasts, vcasts and such, such forms of creative expression allow people the freedom to say what they want, when they want, on their own terms. With millions of people blogging, however, most go unnoticed except to their own circle of friends and family.

But What if People Online Were Better Interconnected?

Enter “social networking,” the ability for technology to connect people to one another in ways not readily apparent in the past. For instance, say you have a friend who knows someone at a company you’d like to interview. You may not realize that friend’s connection, however, unless you mentioned the person’s specific name to your friend. Social networking allows technology to make these connections for us, without the actual messy social interaction traditionally required to make networking connections.

But social networking is not an inherently new idea. It merely graphed traditional networking onto the Internet, which applies an amplification effect to pretty much any trend it touches. That amplification effect gave rise to sites such as Myspace, which thrives on teenager’s and young adult’s needs to be popular. But sites such as Friendster and LiveJournal were doing social networking long before Myspace appeared on the scene.

The last piece of the Web 2.0 toolset are wikis. Wikis allow anyone to edit the content found on a group website. The most famous example is, of course, Wikipedia, an attempt to create the group-think equivalent of a traditional encyclopedia. Large scale wikis however, such as Wikipedia, are far and few between. Most wikis are used internally by companies and organizations to allow for the quick and easy exchange of information and ideas asynchronously.

Clean interface design, more responsive online applications and other ingredients of typical Web 2.0 websites are icing on the cake. None of that stuff matters to the ordinary user if you don’t have something of value to offer them.

Tools, People… You Need Something More

With such Web 2.0 tools firmly entrenched, any new company or startup naturally looks to these kinds of ideas to integrate into their offerings. But tools, whether they’re Web 2.0 or anything else, usually cannot be the core of what makes you unique. Anybody can add or put together a bunch of tools for people to use (e.g., “Start your own blog! Save your photos on our server! Answer endless questions for free!”). What the next generation of online companies must add is something of value to the picture beyond the mere tools. And, while doing so, they must also go beyond the expectation that hoards of people will happily do all of the heavy lifting for them for free, forever. Too many business models today rely on exactly that model and, without careful nurturing and attention, such delicate models will fail.

Online communities, home to tens of millions of Internet users already, are the original “user-generated content” sites. But nobody starts off a new company with the idea that, “Hey, all we need to do is open up a forum and that will be our business!” There has got to be something more substantive to the business.

Trendy companies and websites like YouTube, Myspace and Flikr didn’t just take an existing toolkit and repurpose it – they created new technologies or interfaces that exposed existing technologies in ways that were extremely appealing to people. YouTube, for instance, was not the first video-hosting service online. But it was the first to make it so easy to publish any video you have to their site that even a 5 year old could do it. YouTube would’ve failed miserably if they instead relied on prepackaged tools to allow for video uploads. Myspace wasn’t the first to allow anyone to have their own homepage, but it was the first to show the connections between people’s homepages and interests in a way that folks found interesting and useful.

What’s a Startup to Do?

If I make it sound challenging to get an original idea off the ground and become successful in the online world, that’s because it is. I’ve seen dozens of companies try with ideas that struck me as wholly unoriginal, and fail a year later because they really thought they were doing something revolutionary.

So if you come along and just take an existing idea – like Myspace – and expect to capitalize on that with little additional unique value, you’re likely to fail. Companies need to focus on how they fit into an online space and bring something creatively new to the table in order to succeed. For instance, repurposing and rebranding syndicated content is not new, it’s not interesting, and nobody’s going to pay attention. Recreating successful services such as eBay, Myspace or Yahoo! Answers isn’t going to even be noticed by anyone. Taking an existing website’s concept and making it look like a Web 2.0 website with little additional value, well, people are going to see right through that.

So, without further ado, here are my Top 10 Suggestions for Startup Success:

  1. Take a clean-sheet approach to an idea, and try and come up with a truly original or unique idea, or a spin on an existing idea that will be instantly appealing to people.
  2. Sketch out your idea to its fullest, without looking at any possible competition. If you want to lead, you have to assume the horizon is endless and everyone is behind you, not in front of you.
  3. Turn your idea into something of substance with a demonstration of it that actually works as soon as possible. Long before a business mode or business plan, a working demonstration shows you (and others potentially interested in your idea) what’s possible.
  4. Survey the competitive landscape after you’ve virtually finalized your own thinking on the service or product. I know this sounds counterintuitive and much too late in the process, but most people who are innovators online don’t just copy and improve on other people’s existing ideas. They take it two steps further from the onset and only look at the competition when their own idea is firmly planted.
  5. Write the business plan and ensure there are reasonable assumptions throughout. Too many companies and startups fail making grandiose assumptions about traffic growth and word-of-mouth potential. Remember, there’s only the equivalent of one or two “Myspace’s” every year and you’re not likely to be one of them.
  6. Get a full-blow website up and running as soon as possible that takes the demonstration and turns it into a full-blow, scalable offering. Apply the Web 2.0 graphical treatment to it if you must, but don’t sweat the look because that is the least important element of your business.
  7. Find others online that are in a similar industry and can understand what you’re trying to do. Have them advise or consult with you about your site and service, and then, most importantly, listen to them. I can’t tell you how many times I’ve consulted for companies only to have them ignore my advice and eventually have the project fail. The project may have failed even if they had listened to my advice, but the correlation is noteworthy. Don’t bother with an advisor or consultant if you’re not going to listen to them.
  8. Be patient. Startups take time and most may need more than a year to really gain traction and traffic in the online world. Even the most innovative of ideas don’t always get recognized immediately. Since it’s easy to get discouraged, consider joining an online startup group (there are tons of them) and get further advice and support from them.
  9. Leverage your own social networks and get the word out. You’d be surprised at who might be interested in your website or idea, if they only had heard about it.
  10. Be positive in every conversation you have with partners, possible business investors, even your customers or users. Say “yes” first, even if you think the answer might be “no.” You might be surprised at how such a simple rule might change your outlook about the potential of your website and business.

Good luck!