In 2010, entrepreneurs will still find capital tough to come by. Venture Capital investment in 2009 was down by 50% as they raised less money and spent it more carefully – fewer big bets and less backing of copycats. One direct result of this lack of funding is a concentration of new businesses piggybacking on existing technologies. The blazing success of consumer-oriented platforms like Facebook and Twitter, the Apple iPhone and Google’s Android is due largely in part to the ecosystem of entrepreneurial developers who are extending the base experience with a host of innovative, practical and entertaining applications. Instead of building their own competing services, a new generation of start-ups – both companies and individuals – are going where the consumers already are. They are quickly, simply and cheaply creating new offerings around these popular platforms without the need for huge investments, resources or marketing budgets. The returns might not be as big, but start putting a few of them together and they can quickly add up. Facebook with over 350 million active users and over 500,000 applications has created new markets for brands like Zynga, Playfish, Oodle and Glu. Twitter (which didn’t exist two years ago), now has 10 million users and 50,000 applications. Services like Tweetdeck, Twellow, Twitpic, Twitterrific, Twirl and Stocktwits all tap into and extend the Twitter service and user base. The iPhone supports 115,000 applications with over 1 Billion downloads and a host of branded services. And other consumer propositions like Google, LinkedIn and Yahoo are all moving in the same direction.
So far, there’s been little issue with this mutually beneficial model. Each party recognizes the other’s value and while there’s definitely a mother ship enabling everyone’s success, the feeders are doing their part as well. What’s interesting is, as these new brands seek to leverage the platform’s technology, they are also aligning their brands. To create a synergistic experience, entrepreneurs are acceptably tapping into the established brand’s equity – leveraging their brand names, logos, look and feel and user interface (UI) – somehow without infringing on intellectual property. It makes for a happy ecosystem of entrepreneurial development around a few key technologies – until one brand suffers a major technological glitch or scandal that sets off the domino effect. No matter how small the bet, no one ever said entrepreneurism wasn’t risky!