Recently I received a ‘request for review’ on a business plan for a friend’s company. The company is Neda Communications Inc. I usually consider well-written business plans good reading material so I am always up for reading the stuff and sending any comments back to the authors. This particular plan was double interesting, in that it is an open business plan.
You might ask what does it mean for a business plan to be open. In my friend’s words
an Open Business Plan, published on our website for readership by anyone. This is in an affront to conventional business practice, in which the business plan is a closely-guarded company secret, held as close to the chest as a poker hand, and obsessively stamped “Secret,” “Highly confidential,” and “Do not copy.” Our plan carries no such restrictions.
You can read the business plan here. I think it makes for good reading if you are interested in technology ventures, especially the wave of the new software-as-service companies. It can also serve as a good template for what to put in your business plan if you are planing on writing one, even if it is not going to be open 
Enough about the stage setting. Below you can find my comments on the exec-summary. Feel free to discuss these comments and the business plan itself in the comments.
Show me the success: People love to read/hear about success stories and then they get onboard. You are proposing a new philosophy of doing software-as-service. Show me a reason that I should do my next service in your philosophy. Show me how somebody (maybe yourself) did it and was super successful. That’s when I start to pay attention. You might think that it is unfortunate, but that’s how people operate. If you are promoting a new way of doing things, do it yourself first and give me a good story to tell around it. GNU didn’t take off until the boys at MIT had a working system going that was relatively successful. Now to create that success story, I would recommend:
Pick one service: I always love it when smaller companies have grand visions for how they are going to change the universe. It’s inspiring, it shows vision, it tells us they get the big picture. But when it comes to execution, a small company with limited resources cannot boil the ocean (even for a large company I think it makes sense to focus on one small problem at a time, but much more so for smaller companies). Like I said, I don’t mind you telling me about the grand vision. But right after that, I need to hear about something focused, scoped, and very well defined. I want to hear about a value proposition that I can wrap my head around it.
A good example of this is identity problem being tackled by OpenID. It is easy enough to understand what these guys are up to, both for end-user and partners. i bet in the back of their mind they have much grander visions for how the online world should work, but they have picked a problem they are confident they can solve and are focusing both us and themselves on it. Now after a while pushing through on the idea, they are getting traction from the big dogs.
Find a deserted beach: When choosing this focus niche, I would recommend starting from a service area that is not overcrowded. Mail and mapping are two examples that I would stay away from unless I had some additional value that could get through the clutter and survive the giants. Even if you are moving into a crowded space, pick an angle that nobody is focusing on. This could be a niche customer segment, innovative workflow/process, different pricing model, etc. Bottom line, I wouldn’t recommend going head-to-head with RIM or Hotmail with your value differentiation being only focused on discovery/naming/etc.
Being Open isn’t enough: Don’t get me wrong, I love open software. But I don’t think being open in and of itself is enough for me to use your service. I am – as a customer – trying to solve a problem or I am looking for some level of value. If all things were equal about two services from value proposition perspective, then I might choose the open one because it makes me feel better (and even that is not guaranteed). Open Source software works because it provides a value that you otherwise couldn’t get (and don’t forget that the price advantage is much smaller in services industry as most of your rival proprietary services are free as well). You should find the same proposition for your open service. Reading the executive summary, this didn’t jump out to me.
What about the network effect: Many of the internet services today are valuable on the virtue of their network effects. In other words, many of these services wouldn’t be useful if a large group of related users were not all using it. Digg is useful because many people are using it. The same is true for MySpace: if my friends are not on MySpace there is no reason for me to be. I think your proposition for adopting the open services mantra doesn’t reconcile how it would allow for the network effects across services. In order to attract other service provides into your ecosystem, you should clearly demonstrate how similar value could be generated for potentially interconnected open services.
