One of the lasting reminders from my conversation with Andy is that in business it’s “the network not the technology” that makes a company valuable.  One thing that many tech start-ups focus on is getting the technology perfect, but that is the kiss of death.  In order to be successful and have any valuation you need to examine the networks of people, partners, and connections — something Andy calls “netstorming”.

Technology is not what made YouTube valuable.  Google already had their own technology, Google Video.  What Google bought for $1.65b was the network of users and the volume of data already uploaded to the site.  YouTube did not have assets that valued that large price tag.  If you counted the costs of the office furniture, their physical location, and their server farm it would not add up to billions of dollars.  But, according to a monkey, Google can now put YouTube on their accounting books as an asset valued at the amount they purchased it for.

All companies should look at what networks they have that make them valuable.

  • What companies have you locked in exclusive partnerships with?
  • What associations are you embedded with?
  • Are you partnering with third-parties that service your industry?
  • Are you building a network surrounding your industry that make your company/service/product special?