What is the best ecommerce platform for a small business in 2021?

This year is the year you will go big online. Your small business can bring in more customers and sales by improving your ecommerce game. To do that you will need to choose the best ecommerce platform for a small business. In this article you will find out which are the best platforms, how you can use third party professionals to implement them and how to get your team on board with it.

Here is what you will learn below:

  1. Choosing the best ecommerce platform for a small business
  2. How to hire ecommerce developers and designers for your platform
  3. Adding content to your online store
  4. How to train my team in using ecommerce platforms

Choosing the best ecommerce platform for a small business

Ecommerce platforms are usually targeted at two types of users

  • small and medium businesses (such as yourself)
  • large retailers

I will not get into too much details regarding what large retailers use but if you want too, you can check them out here.

Instead, I will focus on guiding you through the four most popular options ecommerce platforms for a small business. 

Before I go any further I would like you to have a look at this two charts from Google Trends showing how many searches for each of these ecommerce platforms have been registered in the past. This is a great way to see how popular each of them is and what could you expect in the future.

The first one was in 2015 when Magento was king and Shopify was barely starting to grow in popularity:

The graph above shows how the four most popular solutions for ecommerce have evolved throughout the years in terms of Google searches. You can see Magento at the top, Prestashop right beneath it, WordPress ecommerce at the bottom and Shopify growing like crazy.

This is in 2021:

Things have changed dramatically. Shopify grew exponentially leaving all others behind. It’s steep increase in 2020, during the pandemic lockdown shows just how valuable this ecommerce platform has become.

Magento – the ecommerce platform for small businesses with a web development budget

Magento is an ecommerce platform aimed at mid-sized businesses

Magento is owned by Adobe (it was previously owned by Ebay) and works as an open-source application. It first hit the digital shelves in 2001 so it packs quite a lot of experience.

It is estimated that roughly 210 000 stores are now powered by Magento. It is usually used by medium sized retailers because of these reasons:

  • the number of features aimed at web stores that have passed the startup phase
  • enhanced sales, online payment, returns and customer info features
  • ability to customize and extend beyond the standard installation
  • ability to handle large number of orders, if optimized

There are however, some caveats:

  • you will need experienced developers to handle customization and/or extensions
  • increased server costs due to increased requirements

Long story short: Magento is fit for medium to larger retailers. It is usually installed on your own hardware (server) so beyond development costs you will also need to take into account hosting costs. Development and server costs usually top everyone else on this list. However, it makes up in stability and features what it lacks in cost structure.

Prestashop – the ecommerce platform for when you really don’t like Magento but still want open source

Prastashop - a good open source ecommerce platform for a small business

There are now more than 200 000 stores using Prestashop. The company started in France and is now a global player that aims for Magento’s spot. Unlike Magento, it can be used both as a hosted solution (on your own server) or as a cloud solution (where you pay a standard monthly fee for the right to use it).

It’s easier to find developers that can handle Prestashop’s structure so development costs could be lower. It’s a good option when it comes to ecommerce platform targeted at a small business.

The pros:

  • easy to install and setup
  • you can start your store without any technical know-how (with the cloud solution)
  • has great warehouse and suppliers management applications
  • development costs are lower, due to having rather simple technical requirements
  • hardware requirements are lower, resulting in great performance and lower server costs

The cons:

  • it may not be the right solution after you go beyond being a startup and you’ll have to move up
  • smaller developer community

All in all Prestashop is a great choice for small to medium online stores so it’s definitely worth checking it out. It may not get you to $1 billion in sales but performs great for startups. It’s highly customizable and easy to manage.

Shopify – probably the best ecommerce platform for a small business

Shopify - probably the best ecommerce platform for a small business

Shopify is probably the best ecommerce platform for a small business. It works great for small startups, you can start using right away, its pricing structure is great and you get tons of apps you can use on your store. It is the fastest growing solution right now and it is used by 1 500 000 online stores. That’s a huge jump from 150 000 just 7 years ago.

Not only that but the company is really well funded. After it received $100 million in venture capital in 2013, the company became a publicly traded company and its market cap is now $160 billion. Shopify started as an online store solution but now serves businesses both online and in-store through its Shopify POS solution.

The pros:

  • cloud solution: data is always safe, you can access it from anywhere
  • extremely easy to setup without technical know-how
  • you can extend your shop through third party apps and visual themes
  • can work both for online and offline sales
  • extensive developers and designers community

The cons:

  • not so easy to extend beyond core features. The solution can be extended through separate apps
  • apps are purchased separately

From my point of view Shopify is the best ecommerce platform for a small business and its probably going to stay this way for quite some time.

WordPress & WooCommerce – easy, free and unscalable

Although WordPress is not technically an ecommerce platform, it evolved beyond its original use case and its content management is now extremely adaptive. Using ecommerce themes and ecommerce plugins such as WooComerce, shop owners can easily extend WordPress beyond content management.

What WordPress lacks in native ecommerce support it more than makes up in developer community, theme and plugins support. At the moment 74.6 million websites rely on WordPress. Out of this huge figure more than 50% are self hosted.

There are 40 translations for WordPress and WordPress.com receives more traffic than Amazon. 

Unlike other ecommerce applications that are built with commerce processes in mind, WordPress is great at managing content. Products can be described in so many ways and content can be easily published. This does wonders for search engine optimisation and communicating with your audience.

The pros:

  • huge user base, very popular application
  • a large variety of themes and plugins (almost 50 000 plugins at this date)
  • a large number of developers
  • easy to set up and manage
  • a large knowledge base
  • many themes designed specifically for ecommerce

The cons:

  • not built specifically for ecommerce
  • only the hosted version can be used as an ecommerce application
  • not many operational tools (such as inventory management, complex customer service etc)
  • can only be used for smaller numbers of products. If you have more than 2000 products and more than 5000 users you should check something else out.

Long story short: WordPress is a great way to get your store off the ground quickly and at a low cost, especially if you have few products. But if you want something more, you will probably need to look into other ecommerce solutions for small businesses.

Best ecommerce platform for a small business compared
Visual comparison between the best ecommerce platform for a small business

How to hire ecommerce developers and designers for your platform

For all those solutions above, you will most likely need two types of support:

  • implementing and extending the applications: you will need to look for developers
  • adapting the standard layout for your own needs: you will need to look for web designers

To do so, you will need to find talented and effective designers and developers on established online marketplaces. The freelancing marketplaces are pretty straightforward. Think of EBay for digital jobs. You post the requirements and freelancers will bid for your online store requirements. There are dozens of places to find designers and developers for hire but some really stand out:

Upwork.com

Upwork, former Elance.com, is one of the oldest and most popular places to find great programmers and designers from all over the world. There were around 150 000 contracts last year for creative work and around 212 000 contracts for development work.

Guru.com

Guru.com - a place to find creatives for your design or development work

Guru was founded in 2001 by Inder Guglani and now boasts more than 1.5 million members worldwide and $250 million worth of freelancing jobs processed through the marketplace.

How to use themes and plugins to improve your online store

All of the ecommerce platforms solutions listed in this post rely on themes and plugins to customise the layout and improve the functionality of your online store.

Both themes and plugins are offered by their respective developers either free or for a premium. You can think of plugins and themes as building blocks that you can attach to your online store and get it to either look or behave better.

You can find plugins and themes on special marketplaces as well as developer’s plugin shops.

The best places to look for themes and plugins are the following:

  1. ThemeForest.net (Features themes for all major ecommerce solutions)
  2. TemplateMonster.com (Features themes for all major ecommerce solutions)
  3. Shopify Themes and Apps
  4. Prestashop Themes and Modules
  5. Magento Themes and Extensions

When you’ve chosen the application you are going to use to manage your online store, contracted the right developers and designers and chosen the appropriate theme and plugins, you’re ready to implement your online store. If everything is set so far, the freelancers you’ve contracted will know what to do. The overall process will be, in a simplified manner, the following:

  1. implementing the basic software package
  2. implementing the chosen theme
  3. optimizing the theme or building one from the ground up to be the right fit for your brand
  4. implement the right modules (say a special CRM module to handle customer information storage better)
  5. implement payment gateways so you can process order payments
  6. integrate with shipping partners so there few to no shipping errors

Once the process is complete you will have an up and running online store, without any products or any type of content.

Adding content to your online store

Content is any text, image or rich media that you will be hosting on your online store. As a startup, great content can mean great sales. There are two converging reasons for this.

The first reason is search engine optimization. Many of the people that will be visiting your online store and hopefully buying, come via search engines. You probably know a bit about how Google works, you may have heard a thing or two about search engine optimization but the fact is content is king. Great content is better indexed by search engines and can provide you with visitors you can turn into customers.

The second reason you should pay great attention to content is the customer. The customer needs to get as much information on your products and on your company as possible. Upload beautiful images, write extensive product presentations and say everything you can about your company.

And go beyond …

Inspire your visitors to buy from your ecommerce platform

Here you’ll find three great strategies to conquer your market with content. Explain your customers how to use the products. Showcase the lifestyle around your products and brand. The more content you will be pushing towards your customers, the more credible your brand and online store will be.

When you’ve added all the products and the relevant content, don’t stop there. Optimize your product descriptions constantly. Start a blog and get people to send you their stories. Content is king and it will stay like this for a long time.

How to train my team in using ecommerce platforms

Once everything is ready to go live, you still need to do one thing: train the team. Segment your fellow team members and train them according to their responsibilities. For example order management personnel won’t be handling product information so there’s no point in  showing them how to use these features.

The main areas where you will find features that team members need to learn using are:

  • product management
  • customer relationship management
  • order management
  • order fulfillment
  • inventory and warehouse management
  • marketing and PR
  • financial management

Most of the ecommerce applications have their usage guidelines either online or can be provided to you when required.

So training should be done according to responsibilities, it should be done in an interactive manner and team members should be provided with a form of software manual or written guidelines.

Once the online store is set up and reflects your brand, the products are all online and the team members are familiar with the ecommerce software, you are ready to go live!

The functional marketplace is eating the world

The marketplace has been a very influential social and economic construct for a very, very long time. It has been a central concept to commerce all over the world since the dawn of man kind. In time, the marketplace has been refined and evolved to include ever more complex structures. During the past century it morphed from temporarily trade gatherings to large permanent structures such as shopping malls and eventually it evolved into what we now know as the online marketplace. Now – it’s evolving into something else: the functional marketplace.

Simply put a functional marketplace is a combination between a marketplace and software tools that help buyers and/or sellers.

2021 update: I wrote this in 2015 and now it seems the model is spreading across multiple industries. Several examples of (newer) companies employing the functional marketplace model are Airbnb, Peloton (yes, really) or the Adobe Ecosystem, through its creative outlets (such as Behance).

Ebay, Alibaba, Etsy, Amazon and others have one thing in common – they get sellers and buyers in one place. These online marketplaces are fuelled by a business model that has seen a steep increase and proved excellent in the past years. But now, it’s time for the next step:

Functional Marketplace connecting buyers, sellers with useful tools

I believe the times they are a-changin’, like Dylan would chant. The Online Marketplace is not enough any more. The markets demand something more.

That something is the Functional Online Marketplace, a virtual hub that combines the features of a marketplace (buyers and sellers, reputation management, transaction handling) with functions that improve the lives of either sellers or buyers.

The Functional Online Marketplace goes beyond just letting online retailers and buyers trade. It helps the seller run its business better and the buyer benefit more from the product purchased.

And some of the biggest tech companies we know have created this type of Functional Marketplaces. We’ve used them and most customers love them. We just didn’t put a name on it. Have a look at some examples:

The Apple Ecosystem

Steve Jobs envisioned the PC as a digital hub, a central unit that connects the user’s digital activity. From email to web surfing, from music to pictures and more. It then proceeded to create this vision and along the way he built much more.

Apple apps ecosystem - a functional marketplace for developers and users

By launching the iPod and then the iPhone, Apple moved the digital hub inside the consumer’s pocket. With such a valuable real-estate in the reach they’ve had to build a system that shipped music, video and applications from third parties to these devices.

The iTunes Store and the AppStore were born. Apple built the platform to consume apps, the place where customers could download these apps, empowered developers to build these apps but did something else too.

It built Xcode (the development tool for iOS developers), it launched Objective C and than Swift (the programming languages used to build apps) and helped developers create useful apps.

Apple went beyond the marketplace paradigm. Yes, it allowed media and software consumers to meet developers but it also created the platform where they could be consumed and the tools to build them. It built an extraordinarily effective Functional Marketplace.

But Apple is not the only one …

The Uber-marketplace

Uber is an extraordinary successful company that connects freelance drivers to those in need of their services. It connects buyers to sellers. It is technically a digital marketplace. And more.

First of all Uber empowered a set of freelancers that didn’t know they’ve actually had a market. The driver app allows drivers to see potential riders and provides GPS-linked functionality inside a simple mobile device.

The functional side of Uber not only improves the way sellers (drivers) provide their services but actually it makes it possible.

For customers, the app makes hailing a driver an easy task, it allows direct payment on mobile phone and brings the comfort previously unattainable. The functional marketplace at its best.

Google – the biggest functional marketplace

Google is many things. Search giant, mail provider, mobile os developer and genetics researcher among others. But at its core, the business model is quite simple: Get people to pay for ads. Show ads to customers. Make people click on said ads.

Advertising accounts for 89.5% of Google’s total revenue so it’s safe to say that ads are its bread and butter.

To achieve these levels of revenue Google has to place together “The Sellers” (Advertisers) and “The Buyers” (Customers clicking on ads). Though customers don’t technically buy on Google, those that generate the company’s revenue end up as leads or buyers on advertisers’ websites.

To do this, Google built its ad market on top of its primarily function: Search. Users searching for information of interest are effectively buyers in the Google functional marketplace.

The marketplace, therefore provides functional support to buyers. The search, Gmail, Android – are all basically functions that lock in the ad-clicker and in turn generate revenue through these types of transactions.

These are just three functional marketplaces examples but they illustrate the concept. To be successful, a newly established marketplace has to provide more than just a connection between buyers and sellers. It needs to provide function beyond the commercial. By improving the lives of buyers and sellers beyond the commercial, Functional Marketplaces provide the type of lock-in and effectiveness previous models don’t.

Advertising versus Commerce based business models

If you look at the top 10 Forbes tech companies you can see several interesting things. Here’s the list below. See what you can spot:

Top 10 Forbes tech companies
Source: Top 10 Forbes tech companies

The first obvious thing is that most of them are from the US. Second – in the US, most are relatively young companies, with the likes of Alphabet (Google) and Facebook being very young. The youngest companies also have something else in common: their business model is based on advertising. Simply put – they capture their users’ attention and profile and then show ads.

The other companies – not so much, outside of Tencent.

Advertising has been the go-to business model for tech companies for quite some time

Now – no one can say that advertising based models are bad – it seems that two companies managed to get most of the advertising budgets in less than two decades, displacing large media and advertising conglomerates.

The picture, however, is a whole lot different if you look at the top 10 companies, independent of whether they are a tech company or not.

Source

There’s not one single advertising based company in the top 10.

The anomalies that stand out are Berkshire Hathaway (investment) and AT&T(telecom). The other companies are all retailers of something. Their own products, drugs, oil you name it. Even the two anomalies are related to commerce. If you look at Berkshire Hathaway’s portfolio you will notice that it resembles the list above quite a lot. AT&T is technically a retailer of telecom services with a quasi-monopoly on the US market.

Commerce based business models are the future of tech companies

I’ve noticed this idea in two key areas:

  • most of the new business models that are emerging in China are not advertising but commerce based. This is due to the fact that China’s VC scene is more grounded in a historic perspective of trade rather than advertising.
  • Shopify’s growth has been largely ignored by Sillicon Valley due to them not being related to the crowd consensus. Its stock trades at 40 times the list price 3 years ago
Shopify not fitting in with the cool tech crowd.

My guess is that the future of tech businesses is more commerce related than advertising, payment or any other niche model. Commerce is at the basis of our society and as long as we’ll have a functioning global society (not guaranteed, btw), commerce will make our world better.

Top 8 Online Beauty Ecommerce Stores in 2021 – How do they sell online?

The Beauty and Cosmetics category is one of the fastest moving digital commerce areas. It is a highly competitive and innovative market with large brands quickly adopting digital models and challengers innovating their way to the top.

The emergence of the ecommerce sales channel for beauty brands has seen a long wait. The time has come for beauty retailers to align with the customer’s demand and specific requests. For example, a recent AT Kearney study showed 28 percent of online shoppers use the digital media to get informed on products. They carry this information in stores where they are sometimes more knowledgeable than the store assistants, which may pose a real challenge for beauty brands.

The AT Kearney study shows that only 16% of all online shoppers are online enthusiasts. The rest either use the digital media for information or for shopping for products they are already familiar with:

Beauty shoppers split

Online shoppers are more inclined to shop for particular products, such as skin, personal and hair care. Products such as beauty tools and nail care are less likely to be purchased online, unless is a very specific product, one the customer is already familiar with:

In this post we’ll get a glimpse of the eight most important type of beauty brands that engage their users through digital commerce (also). We’ll have a look at a selection of global champions with different backgrounds and different models. From digital pure-plays to established brick and mortar brands, let’s have a look at some of the most interesting approaches to beauty and cosmetics digital retailing:

1. Amazon Beauty

As expected, Amazon leads the way when it comes to online beauty retailing also. Customers are delighted to almost 2 million products, including luxury brands.

Its Beauty category is the go-to place for most of online enthusiastic shoppers, where Amazon is available. And with Amazon’s shipment policies, that’s basically everywhere.

Amazon’s secret weapon lies in its free-shipping policy (for orders above 25$), a great motivator for online shoppers and a better threshold than challengers Sephora and Beauty.com.

Another great asset Amazon will use to gather shoppers around its beauty retailing section is the fact that more customers use Amazon (30%) than Google when doing online product research.

2. Sephora.com

Sephora is generally seen as the actual leader in the digital beauty commerce. Though it lacks Amazon’s ecommerce strength, the company is part of the largest luxury high quality goods (ahem…ahem) group, LVMH, packing a lot of beauty retailing know-how.

The company has developed a great omnichannel model that focuses on mobile as a bridge between online and offline.

One of the best things Sephora.com has implemented in its web store is the content marketing and digital assistance features. I’ve previously covered the subject and praised Sephora’s efforts to offer quality content, as praised are due.

The curated content customers find is a great choice to build loyalty. So is the Community where customers can browse among the knowledge base or post questions and interact with professionals.

As mentioned, one of the greatest assets Sephora has is its focus on digital rich content. Users are treated to:

  1. Sephora TV, the go-to area for video advice, how-to’s and trends
  2. Sephora Glossy – a fashion, beauty and style blog that offers great advice from beauty professionals in a great, visual format.
  3. The Beauty Board – an user generated gallery from customers that upload pictures to showcase how and which products they use.

Some other touches make Sephora a great choice for beauty products customers, not the least of which are the three free samples with each order (a great way to drive future orders) and the mobile apps that make us of barcode scanning to offer price info and customer reviews.

3. Beauty.com

Beauty.com is an online retailer so it has no apparent need or intention to leverage offline or omnichannel sales. It has developed specific filters and features to cater to customers that either know what they want and want the best price or they can quickly decide.

The auto-reorder option seems to be a great first step to a subscription program.

Customers can set an auto-reorder flag for certain products, which can be shipped each 30, 60 or 90 days. Before the order is shipped, customers receive an email notifying them and they can pause, skip or cancel the auto-orders. The customer incentives are savings and free shipping.One of the features that really stands out (they have a pop-up to insure it stands out) is “Auto reorder and save” option. Simply put, the online retailer has noticed the habitual purchase beauty customers take and leveraged it.

Another great feature that lets customers reach the right product is the filtering option which is set not only for product features but also customer concerns and specific needs. In the Make-up section, the eye category, one can find brand and ingredients options, but also filters such as concerns (acne, dryness or oiliness), benefits (curling, hold or smooth) and skin type. Unfortunately, the filters are not usable on the smartphone version of the web store.

Just like its direct online competitor (Sephora.com), Beauty.com offers free samples, free shipping for orders $35 and above, free returns and 5% back through its loyalty program. It also features great content areas, such as its Beauty Blog, with Romy Soleimani, The Latest Trends section reviewing product news and a Beauty Videos section, ranked according to customer reviews. A great no-no on the video section is the fact that videos embedding is restricted to affiliates only, leaving a lot of marketing potential untapped.

Download the rest of the report below:

Robots are changing Ecommerce

The term “robot” essentially means “worker”. It was coined by Czech author Karel Čapek in his science fiction work R.U.R. and since then it has become the standard term to define semi-autonomous machines.

It really is hard to define what we actually think of when we say robot. It may be an anthropomorphic fun figure such as Honda’s Asimo or a somewhat creepier animal version of it, such as Boston Dynamics’ Spot.

Fetch Robotics. Now reporting to Skynet.

But it can also be a simpler and more applied machinery. Robots can be built to handle some of the most menial and repetitive tasks, including those that have to do with ecommerce fulfillment.

In terms of operations, fulfillment means everything that has to do with getting ordered merchandise to the customer. It includes picking and packing and let’s face it – it’s boring and repetitive. The robots below do just these things. Robots, unlike people, require no pay and are available 24/7. Whether using robots is effective or not, moral or not, it’s up to you to decide. But no matter your view on the subject, you have to admit they look awesome.

Fetch and Freight from Fetch Robotics make the company grow from less than 10 to more than 1500 employees in just 5 years

Back in early 2015, Fetch Robotics was startup company. They’ve received $3 million in founding and started working on a mysterious warehouse robotics project.

They’ve unveiled not one, but two robots aimed at helping warehouse staff make it through the long corridors. Their names: Fetch and Freight. Below is Freight, my favorite, a little guy following around picking staff and going back to base when orders are finished picking:

In 2020 they are beyond their Series C, with $94 million raised and over 1500 employees. Seems things are going great.

From 15 000 to 200 000 Kiva Robots in Amazon Warehouses in just 5 years

In 2012 Amazon paid $775 million for Kiva Systems, a Seattle based company manufacturing warehouse robots.

In just two years Amazon integrated the technology and in 2014 there were 15 000 Kiva robots doing the picking and packing job twice as fast as humans could. Inventory was moving twice as fast and products were delivered to packing stations in just under 15 minutes, faster than any human could.

In 2019 there were more than 200 000 robots handling orders in the Amazon Warehouses.

PS:

2020 update: The original article, written in 2015 presented Omniveyor from Harvest Automation but it seems it wasn’t all that successful.

Is Facebook building a Mega-Bank?

Facebook recently secured a patent for a system that builds credit rating based on social connections. Is this a piece of what could be the Facebook bank?

There are some strong arguments that yes, Facebook is building a peer to peer lending service for its 1.49 billion users.

Here’s the backstory:

PayPal president David Marcus resigned from PayPal and joined Facebook a year ago. Reportedly he joined the company to work on the Messaging products. Quite a big change. So the obvious question was why would the president of the biggest online payments company would quit his job to start working on the messaging app?

But then, in March 2015, Facebook announced a new feature in Facebook Messenger: payments. Basically anyone could send their friends a couple of bucks without having to leave the app. Plus – it charged zero fees. Zero. This sounds great but … how would they monetize it?

The credit scoring patent may be the answer. What if Facebook would roll out a general feature that lets anyone lend anyone in the network based on their credit score? Peer-to-peer lending is one of the biggest and yet most underrated innovations in digital finance.

With a stable payments system, a great credit scoring patent and 1.49 billion lenders and borrowers Facebook may be building the largest bank financial system in the world. All digital, peer to peer, decentralized and ready to come online just as banks are faced with an impending meltdown.

Think that’s crazy? Maybe not. Meet George Soros, “the man who broke the bank of England” when he short-sold $10 billion worth of pounds. He did this during the Black Wednesday Financial Crisis and earned $1 billion in the process.

In 2012, when Facebook stocks were plummeting, Soros bought Facebook stocks. When he bought these stocks, the social network looked like it was in a really bad shape:

Let’s just say things are a bit better now:

But his great investment timing is not what points to Facebook being on the verge of a huge financial change. No. It’s the fact that just as Soros was purchasing his Facebook stocks, he was selling his stakes in financial companies such as Citigroup, JP Morgan, Goldman Sachs and Wells Fargo.

So if it looks like a duck and it quacks like a duck, it’s probably a duck.

Facebook has built a peer-to-peer payment system. It hired the man that helped PayPal grow to its present market share. It secured a credit scoring patent that works within a network. Soros moved his bets from the big banks to the most popular social network. There is a growing need of peer to peer lending across borders and Facebook can deliver.

We’re in for a 1.49 billion customers bank that works across nations and lives inside your mobile phone. I guess this qualifies as a Mega-Bank.

What do Uber, Tesla and Global Logistics Have in Common?

We expect historic changes to be a bit dramatic. We think of “Evrika!” moments when inventors discover new technologies that make our lives better.

The reality, however, seems to sneak up on us. We now know how important the Internet is but few would have guessed it when it was used to exchange short bits of information between academics. Same for Google – it is now easy to see how important having the global stream of information at your fingertips actually is. But it was a lot harder when the concept was still in its infancy.

Not even Steve Jobs could have predicted the impact the iPhone would have on the world. And I believe Elon Musk will look back on these days and be surprised by the changes Tesla brought to the world.

When Elon Musk announced the Powerwall, the world shook a little bit. Its beautiful design and promise of energy independence seemed almost dreamlike. But the Powerwall shows a far larger vision than just making the home energy independent.

Powerwall 2 & Solar Roof Launch from Tesla, Inc on Vimeo.

It is a promise that we could harness the virtually unlimited energy of the Sun and store it. Storage, you see, is the real problem. The complex systems we use are powered by energy that is consumed almost instantly. Our cars, our electronics, our planes – they feed on streams of energy as it is formed. Even the best energy storage systems fail after a short while.

The batteries that can save the world

The promise that one day a company (could it be Tesla?) can find a way to harness and store the sun’s energy (or any type of green energy for that matter) has an impact we can hardly predict.

The implications range from pollution reduction to geopolitics to economics. Especially economics. To understand how much we could save by switching to green energy, have a look at this estimate for an average Tesla car compared to one running on fossil fuel:

Think that’s a lot? That car “only” logs 120 000 miles. Compare that to the 397.8 billion miles logged by all trucks used for business purposes (excluding government and farm)In the US alone.

Now mix the numbers and add the savings Tesla’s technology can bring.

Add something else: sun-powered electricity. Think of trucks and ships that can move goods around without any need for refueling.

Because that’s where the real change comes in. When products are manufactured and shipped at a tiny fraction of what they are today, everything changes.

When we take out the distribution costs, the energy costs and any other costs associated with energy from our current commerce paradigm, everything changes in the world.

The products we buy would have costs that would be driven to the ground. Without costs associated with energy consumption and storage, goods would be manufactured cheaper and faster (instant energy), shipped cheaper and faster and consumed by more. We could have cheaper products, consumed by more and believe it or not, more profitable to sell.

But how could the system change?

There is only one thing stopping this: the current transportation and energy system. Musk’s vision has already stirred things a bit with car dealers. What happens when the company will go against the global leaders in energy and transport companies, the ones still relying on fossil fuels? These companies would have to change or fight the change. The former is what one might expect.

That’s where the Uber concept comes in. Uber connects, as you know, smaller professionals that provide transportation services. Right now this is limited to personal transportation. Uber, today’s Uber, acts as a glorified cab dispatcher.

But tomorrow’s Uber may have bigger ambitions. Somewhere behind the scenes, investors know that there’s more to Uber than meets the eye. The reason the company landed a $41 billion valuation is that it has the potential to change the global transportation system. Not just personal transportation but all kinds of transportation.

That includes making sure goods are quickly moved from manufacturing to storage to the consumer. Don’t take my word for it. Uber has been experimenting time and again with logistics. And if Uber won’t, there are other companies that will.

So you have virtually unlimited power. You have storage. You have the a system that makes sure goods are sent to the right destination by the optimum freight. This means the kind of change we now can’t fully comprehend.

It means that good is now in motion.

Book Review: The Hard Thing About Hard Things by Ben Horowitz

Ben Horowitz tells it like it is: starting and running a tech company is hard. Really hard. But not for the reasons you would think.

Founding and running a tech company is generally viewed as the thing anyone should aspire too. The fame, the riches and everything that goes with it is the dream of our generation. Silicon Valley is just as attractive as a career in Hollywood or being a rock star. With poster boys such as Mark Zuckerberg or Elon Musk, young men and women grow up believing that all you need is a great idea and the guts to start it.

But that dream fades when your bright idea and optimistic vision have to face the hard truths of running the company you’ve just founded. Ben Horowitz has a reputation of being a no-bullshit kind of guy and you can actually feel his straightforward words telling you that your dream will be squashed by reality.

Unlike the glamorous and relaxed articles you’re reading about the likes of Facebook, Google or PayPal, Ben’s book is a clear indication of what you can expect when running a company and what to do about it.

It’s definitely not a perfect guide to running a company but it is a great start to understanding what to expect. Being a CEO is a tough place to be in. It’s a lonely place. It’s full of doubt and decisions that may or may not be right.

Telling it like it is

One of the greatest idea I’ve found in the book is telling it like it is. Yes, telling it like it is when things fall apart. Because they constantly do and someone has to constantly put them together.

Sometimes CEO’s start trusting their PR too much. They start living the persona they need to project to customers, investors and the media. Of course, no one can just go and tell the world that they don’t have enough data to make a decision. Or tell investors that the company may or may not exist in the next 6 months or the product development is stalling. Or tell customers that the product they’ve just purchased may be out of the market in the next year.

No. The CEO’s job is to project confidence and show the world that everything works just smooth. Right? But what do you do when things are the opposite of smooth? What should the CEO do when they fall apart and everything starts running amok. How can you tell the engineers that the customers hate the new features and they just have to rewrite everything so it can be spotless. How can you tell the marketing team that the last campaign they’ve pulled is bringing in no results.

Ben’s answer is simple:
“[…] give the problem to the people who could not only fix it, but who would also be personally excited and motivated to do so”

 

There are three big reasons to do so:

  1. number one is trust: when people get all data, good or bad, they will respond with trust. When dealing only positive thoughts the bad things are kept to only few people. Eventually they will leak.
  2. number two is problem solving: the CEO is not necessarily the smartest person in the company. Nor does he or she need to be. It just needs to relay the correct problems to the correct people and make sure they solve them.
  3. number three is culture: a culture where bad news are swept under the rug is a flawed and inefficient. People spotting the problems don’t have to be the ones who solve them.

 

Take care of the People, the Products, and the Profits – in that order.

Throughout the book Ben Horowitz deals with hiring, managing and retaining employees best fit for the company. And he stresses the “fit” part. People that cannot work in a team should not be part of the team. Egos and politics can destroy companies if not properly managed.

The people themselves have to build products that the market needs and wants and there’s plenty of advice on this topic also. Concise, clear and to the point advice.

Ben shows that innovative products and successful companies are built by CEO’s that lead without knowing where the path would lead to. They lead their teams and they try and try. Sometimes they get the right answers. Sometimes they don’t. That’s because there is no formula for building the equivalent of Facebook or Google or Apple. If it were – more people would be doing it right.

The hard things are things all responsible entrepreneurs and CEO’s have faced. It’s the worrying, the lack of direction or know how, the lack of guidance and the loneliness. It’s keeping your emotions in check and being stronger because of it. It’s finding answers without showing weakness. It’s the struggle you have to embrace so you can continue when things get rough.

In the end I would highly recommend this book to anyone starting or running a tech-related business. My only regret is not having read it five years earlier but then again – it was not written then.