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Over the past 8 years Facebook has been urging its user to be more public about their lives and finally Facebook took its own advice. Unless you live under a rock, you probably heard that Facebook finally debuted on the Nasdaq. It ended the day at $38.23, valuing the company at $105 billion. Only 23 companies are worth more then Facebook and yet most of the media coverage has labeled the IPO a failure.

Why? Because all those wannabe shareholders who subscribed during the IPO roadshow did not get a pop of 25% or more on day one. Personally, I believe they got what they deserved, they didn’t do their homework and were being lazy. The real money was made by the ones who took the risk many years earlier as investors and more importantly the employees.

The biggest losers were probably the private clients of Morgan Stanley, which was the lead manager. Those clients thought they had special access to one of the most anticipated IPO’s only to find out people with an E-Trade account could buy the stock a couple hours later for the same price. facepalm.

Don’t get me wrong I still think Facebook has an uphill battle to justify the $100+ billion market capitalization it has. Do I think Facebook can go 5x or 10x from here? At 10x that means Facebook would be the first trillion dollar market cap company. Seems highly unlikely, but they seem to be in the right place to take advantage of it.

Ironically, the biggest issue they will face is being publicly listed. Those quarterly conference calls might get brutal when analysts start dissecting the quarterly revenue numbers whereas the company will be focusing on the long term strategy and numbers.

Whether you are a CEO, sales guy or entrepreneur the fantasy of exponential growth is what we all strive for. However to experience white hot growth is a myth. Over the past 2 weeks I’ve been seeing headlines of the white hot growth of Pinterest. (Yes, it’s heralded as the next “big thing” but I have zero use for an online scrap book. That maybe a simplification of Pinteret but that’s not the point of this post.)

Pinterest is the latest in a series of similar stories such as “XYZ is growing faster than Facebook did in its first 18 months” or “XYZ has more 1/4 the page views of Twitter”. The headlines are supposed to grab the attention of the reader and I assume make the reader want to get on the latest bandwagon social platform. The thinking is “wow I’m on Facebook and if XYZ is hotter than Facebook then I should be on XYZ.”

If you look at the early growth curve for Facebook or Twitter in retrospect it was good but not phenomenal. Twitter was slow and steady in the early years in the past 2 years the growth has really accelerated. In fact, when Facebook was launched it was not for you and me, it was targeted at the Ivy League schools.

Recently, Dennis Crowley of Foursquare summed it up best:

Everyone thinks the Foursquare experience is this rocket ship that started at SXSW 2009 and it hasn’t let up, when in reality it was a little spike and then a summer of nothing

The truth is Dennis can say this now and be open about it, back then if it said the same thing it would have surely killed the enthusiasm. Because, from a startup perspective you want everyone to believe that your company REALLY is the hottest thing since Facebook or Twitter. Which is exactly what Pinterest is doing. The question is, will they be around to be as honest as Dennis is.

We’ve all heard the saying “the customer is always right”, it stems from the fact that the customer has money and never argue with a potential paying customer. Based on Apple’s latest earnings, I’m starting to rethink that age old quote. Apple announced a record $46.33 billion in revenue, of which 73% came from iPhone’s and iPad’s. The iPhone and iPad were created completely in-house with zero customer interaction or focus groups. One of Steve Jobs quotes about product developement:

It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.

Can’t really argue with Steve. Customers are really good at asking for incremental improvements. At MProfit we field 100′s of request a month and many are useful but most are not. Most are requests for a single feature to help that person but of course that’s not how a customer spins it. They usually tell us “if you add XYZ feature you will get 1000′s of new customers.” However, companies don’t grow exponentially by adding one feature here or another there, it’s about completely flipping the mindset and getting many more new customers in the door.

One of my favorite quotes in regards to product development supposedly came from Henry Ford:

If I’d asked my customers what they wanted, they’d have said a faster horse

The car industry for the past 50 years has been stuck in this add one feature here or increase gas mileage by 5% sort of mentality. Innovation has been slow and hence General Motors, Toyota and Volkswagen each have taken turns for the top spot for most number of cars sold every year for the past 3-4 years. As a consumer, I would ask for a 500hp car that gets 50 miles a gallon, which is what Henry Ford was getting at.

Companies big or small need to think about innovation on a much larger scale and not get trapped in a feature war.  It’s tactical thinking vs strategic thinking, but many people forgo the strategic thinking because it sounds too dreamy/fluffy and doesn’t bring in revenue right now. However, Apple has shown it really pays to think different and essentially tell it’s customer to buzz off because they don’t know any better. And yet I still come back to Apple…genius.

Everyone loves a great comeback story and recently Detroit has a great one to tell. Beginning in the 1950′s, the American car makers Chrysler, Ford and GM all based out of Detroit helped shape America. The “roaring 50′s” as it was called allowed people to live in Suburbia and yet commute to work because of the car and the government’s road infrastructure build out. When you watch the highlight reels of new car introductions from that era it’s similar to the Apple launches of today. The world would wait and watch in anticipation of what new “awesomeness” would come from Detroit. The job to have back then was working for an automaker. Detroit was the hub of industrial activity, home of Barry Gordy and Motown Records, the first record label for Michael Jackson. Then the late 70′s came and Detroit was no more.

What happened? It was a combination of high oil prices, hubris and Honda. During the 1960′s Detroit was obsessed with cheap fuel, big horsepower and open roads which led to their focus on muscle cars - Chevelle, Camaro, Mustang, Charger, Corvette, Pontiac GTO, and many others. Once the oil crisis hit in 1973, Detroit didn’t have a backup plan and the Japanese took the opening to launch their cars. The fuel efficient Honda Accord debuted in 1976 and quickly made a name for itself. Honda did all the right things and soon the Honda Accord became the number one selling car in America.

In the 80′s American car companies had a bad reputation for shoddy cars, interiors made of cheap looking plastic and designs that only a grandmother could love – case in point the Pontiac Aztec. During the 90′s the Japanese were doing so well in North America they all launched their own luxury nameplates – Acura (Honda), Infiniti (Nissan) and Lexus (Toyota).  This led to them selling even more cars and the Detroit automakers slipped even further in sales. All the American car makers were focused on fleet sales to the rental car companies who only wanted cheap and boring cars to rent which was an easy to market to go after, but margins were slim in that segment.

During the early 2000′s, American car companies were focused on the high-margin SUV market and captured that segment with force. However, once the financial crisis hit most of them faltered. The American car makers from Detroit approached the US government for a bailout and got close to $25 billion.

Since then, the American car makers have been making hit product after hit product. The Ford Fusion and the upcoming Dodge Dart are two examples of products that consumers actually want to buy. In addition, many consumers (myself included) who would have never looked at American cars are actually looking at them once again. The Chevy Cruze in India has been a moderate hit and looks quite nice, also the value for money is another reason its doing well in India.

When I was visiting Los Angeles in August, I was impressed with the number of Ford Fusion’s and Ford Flex’s on the road. Southern California is car crazy and if a car can sell in that hyper-competitive market it will do well anywhere. In fact Honda has their headquarters in Torrance, California and Honda used to reign over this market. Sadly, the hubris that hit the American automakers in the past is starting to appear at Honda. Honda’s highly anticipated Civic re-design was panned by consumers and Consumer Reports dropped the Civic as a recommended model. And the previous number one selling Accord has started to look dated compared to the competition, so the story continues…

If you were looking for a year end Top 10 list, sorry to have disappointed you. On the whole, 2011 was a year that many people would like to forget especially the Indian equity markets. On the upside, many technology startups such as Dropbox, Evernote and Twitter received even more funding. I would say 99% percent of the people were unhappy with 2011 and 1% were ecstatic about 2011.

A trend that I have noticed more and more during 2011 was in the area of seed funding for a startup. I’m not an angel investor but I get about 1-2 unsolicited pitches a week. During 2011, most were structured like this:

Idea Guy – I have a great idea and I need 1 million dollars to hire the entire team to do the work

Me – What do you mean by entire team?

Idea Guy – product team, engineering team, UI/UX team and marketing team

Me – So what is your role?

Idea Guy – I have the idea

Me – Do you have anything so far to show for it

Idea Guy – Of course not, hence I need the million dollars

Me – Do you have a website?

Idea Guy – No, I couldn’t get the domain name, I couldn’t figure out which hosting company, but I have a PowerPoint slide deck…

At this point, I usually just mentally shut down and hope my cafe latte is still hot enough to enjoy while being tortured into viewing the slide deck. I could spend hours talking about how bad most of these slide decks are but honestly that is not the most concerning thing. The most concerning thing is the “Idea guy” wants a million dollars and then everything will happen, that is not how it works. You need to bring some talent to the table.

I can understand if you don’t have the technical skills to acquire a domain name, start a blog or get a basic website running but you might have friends that can.  The early days of a startup are about conserving capital and trying to persuade people whether it’s to buy your product or get things done cheaply. This “idea guy” wanted to hire PaperPlane one of the best UI/UX companies in India to design the site, sure why not it ain’t his money.

Recently there was an article about Dropbox founder Drew Houston who had to hack the Apple operating system to understand how the desktop icon images worked. This was something that even other engineering teams at Apple couldn’t figure out. I’m assuming the VC firms are backing Drew as much as Dropbox, as they know what is possible with him.

Bottom line, if you can’t figure out how to get a blog started (or know someone that can) how in the hell are you going to run a company. I can envision that million dollars being spent very quickly, which is not what people want to see when they are investing in an idea, person or company.