I got started on this as a response to a post at On Product Management talking about the “New Rules of (almost) Everything” and realized it needed (or maybe I needed) more than a comment should be. Please go read the whole post too, but I’ll highlight the rules here:

1. Solve a problem that really causes problems for people. Simply being cool isn’t enough.
2. Figure out how to make people do what they need to do easier or quicker or cheaper.
3. Help them do something new that they couldn’t do before, but always wanted to do.
4. Understand the value you deliver and communicate it to them clearly and simply.
5. Charge a fair price for the innovation and build a scalable business around it.
6. Hire smart people to help you because you don’t have all the answers.
7. Teams of smart people have the best chance of finding creative solutions to new problems.
8. Don’t forget that the next economic downturn will come way sooner than you expect so prepare for it when times are good.

I really like the “New Rules” because they focus on the basics of building a business (whether a startup or a product line). I think that we are exiting a second period in less than a decade where the tech industry forgot a couple of these basics.

#4 with #1: both in the Dot Com bubble and surprisingly often in the Web 2.0 wave, people are building businesses around cool stuff where they ADMIT to not knowing how to make any money off of it. This ties in directly with #5 in designing the scalable business from the front.

I’ll admit that there are two cases that look bad but can be ok: 1) A business that needs to go viral to succeed. Fine, go in cheap to get the business. 2) A true research project functioning as an incubator.

However, in both cases it is irresponsible to not at least have a theory of how to make money on it. It might not play that way in the end but without thinking about it up front, the only exit is to sell it to the “greater fool”. (Then again, there are a lot of those, aren’t there)

I even read a job posting for a company company looking for a head of Product Management for Monetization (they were looking for somebody to figure out how to add features that would make some money), I have to wonder what people are thinking.

At the end of the day the ‘new rules’ are the same as they’ve always been: Do something that people want enough to pay you enough to make a living. If you can’t figure out how your favorite gizmo would be worth what it will cost you to make it, you’ll never succeed.