How To Split An Atom

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Kaplak is a Danish startup which had ventured to take a crack at the “niche producer’s problem” in online distribution, which is actually two problems :

First, visibility. How are these long tail products seen? No one looks or searches for a product they don’t know about. Search has increasingly hard times delivering good answers to “thin” longtail queries. Search becomes less valuable, as one has to spend an increasing amount of time browsing search results. Peer produced filtering communities and sites however, i.e. the rich context hubs of the internet, becomes more valuable, as we increasingly rely on the recommendations of others to find what we look for.

Closing The Production Loop

Second, financing. How are long tail products financed and paid for? Niche producers are vulnerable to any cost in money, time or complexity, because they may not have a business model yet. Niche producers have little time to learn, because they have no or a very limited business model to finance their learning time. It is very much possible to grow an online business as a niche producer today, but it requires a lot of specific knowhow about online marketing, web software and internet services in order to do this successfully. And if you’re successful, you risk spending all your time running an online business, and not doing what you do best : creating new products.

Now, Kaplak’s offering is centered around the concept of “kaplak”. In short, the producer of a product designates a percentage of their price to the online mediators who help connect their product to their market. Mediators can do this with the help of a CSS-customizable Kaplak widget, adaptable to different platforms, from HTML to Facebook. Think of the widgets as an “e-shop in a link”. This is how easy and convenient we want the Kaplak enduser-experience to be.

The producer is free to give from 0% to 100% kaplak, whatever suits the product and it’s market. He/she doesn’t pay anything, until the product is actually sold and kaplak is paid from the price. Products can be anything from codes for online computer games over patterns for baby footies to videos in HD quality about heart surgery. I.e. they can be as “slim” in a longtail sense as possible, and still not pay a dime before a transaction is made. There’s no centralized index, or at least there need not be, because 90% of all sales will be made in the niche contexts where our mediators operate and use the Kaplak widgets.

Kaplak pays for everything involved in making products available to customers, i.e. hosting, bandwidth, secure payments, related services etc. Kaplak will rely on distributed computing (via bittorrent) and peer production tools for filtering/quality assessment etc.

We do everything to minimize costs and to utilize “the long tail” in it’s full length. High volume means that we can offer the service for free also for those products which pays zero kaplak and those which doesn’t sell at all, or too little to generate profits. Anyone can make a business model using Kaplak, but it will be particularly well suited for highly specialized products, for which there are little local demand and much greater (if geographically scattered) global demand, yet are otherwise very hard to find using Google or other means (think page 17 of search results).

We also work with schemes for releasing regular Kaplak builds under a free license, in order to help open up innovation in this field.

We’re still early in our development as a startup, very much at seed stage. We’re still exploring and developing our initial product range, but we have a clear vision of what we’ll end up with. Right now we’re trying to express and communicate our vision in order to connect with talented people who can see what we’re trying to do and may want to help out.

More background info can be found here.

Lessons

These three points sum up our own experience from the last year.

1. Start today. Don’t wait until “you’re better prepared”. Engage your market, your present and future advisers. Ask for help, advice and seek it out anywhere you can. Comment where you can, because you never know who might help you. If we’ve known what we know today, we’d have started our blog a year ago. We could have started our dialogue with the people we wanted to help and started to build online traffic at a much earlier stage, which would have been very fruitful for our product development. There’s so much to learn when you’re already “out there”, risking something, and a lot of valuable feedback to get. And you are capable of making swift adjustments, when something turns out differently than you expected.

2. Choose the right partners. It’s easy to create a group of “yes men” around the company, i.e. people who are as enthusiastic about your business as yourself. Don’t. Find someone who can help crack the core problem your business will solve, and who supplements your own capabilities. And be clear about company roles. At Kaplak, we had many problems and conflicts this past year because I made the mistake to make my partners my visionary equals. It is nice to have someone who likes the project and praises it at every occasion, but it soon creates tension, if there’s no real value added. It is like pissing in one’s pants in the winter : warm at first, but really cold later. This was a huge mistake in Kaplak’s young life as a company, as it muddled all communications and made it unclear who was really the entrepreneur and leader of the company, and who really contributed value to the company.

If you’re the leader, there should be no confusion about this. If you’re a visionary, you may need a practical “do it” man. If you’re lousy with numbers, you need someone who has a good time cracking numbers. If you’re not capable of webdesign, you need to ally with a design individual. If you can’t lead people, you need a good leader too, with that role. You also need someone, who dares to speak up at the right time, even when (or especially when) they don’t understand what you say. And you need someone, who will be tough enough to hang in there, even when the going gets tough, because it probably will. Be clear on all agreements, and make them in writing, so that you can put your finger on what people need to do to fulfill any agreements satisfactorily.

3. Remember to distinguish between yourself, your company and your product. There are needs for you, there are needs for your business and needs for your product. They are not always the same.

You may need to take a day off with your family, even though it means you leave your company’s needs unattended. It will survive this. You are the most important person, and you do well for your company too, when you cater to your own needs.

You may ditch the product completely, if you find there’s no market. This doesn’t always mean you have to ditch the company too, if you can come up with other products. Markets and products can change. Don’t be afraid to shift strategies in the middle of everything. If you sense you’re on the wrong track, you’re probably right. There’s no such time as a “too late” to adapt.

4. A great company is built from taking many small steps. Stick with it, even when things look bad or you don’t feel like it. Your company will only gain knowhow and grow stronger with change. With each step of the way, you’ll learn something new. Even if your company fails, you will have gained something valuable : experience and knowhow.

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