New Businesses

Entrepreneurial notes from all over . . . companies out-competing themselves:

Talkshoe, which I blogged about last Fall, seems to be humming along with its "talkcast" technology, but it turns out that the firm has something of a competitor -- locally: Liberated Syndication, which recently got rolled up into Wizzard Media, part of Wizzard Software, to create what it calls "the largest podcasting distribution network in the world." "Sharecropping" is what Nick Carr calls the user-generated content production business model. It's lucrative, and simultaneously old and new; podcasting distribution means your customers and consumers are out there competing on your behalf. Eventually, however, the sharecroppers will go into business for themselves.

The intelligent avatar technology called "Abby" got a nice plug in last Saturday's Bits & Bytes as Abbyme.com, which allows users to program the avatar to send audio files on their behalf, was getting prepped for a business plan competition. Note to team, based on a quick check of the files that users are sending: watch for the copyright cops. All those clever movie clips that Abby is sending -- they belong to someone.

Abby has other applications and a much more polished appearance, via http://www.getabby.com/, the intelligent virtual assistant firm that used to be known as Eidoserve. (Earlier notes on eidoserve here (Post-Gazette) and here (Pittsblog).) Abby is more traditional entrepreneurship: nifty technology looking to fill every niche it can find. I don't know about the business prospects for using Abby to send movie clips to your friends (then again, ringtones are just about the world's biggest music market; who knew?). But CMU, which spun out the underlying technology, is making money here.

And I spent some time last Friday visiting Ellsworth Street's CoCo's Cupcake Cafe courtesy of an invitation from co-owner and self-proclaimed cupcake chick Shea Mullen, who took note of my earlier posts on the Cupcake Class. CoCo's, like Squirrel Hill cupcake competitor Dozen Cupcakes, is about two months into streetside retailing. If traffic on a late Friday afternoon is any guide, the walk-in trade is doing fine. Better money, though, at least for now, likely comes from call-in orders and catering. Can Pittsburgh support two cupcakeries? Better two than one, perhaps (echoing the old line about how a small town can't support one lawyer, but it can support two). But chic itself won't carry a cupcake store, even one like CoCo's that has space to host private parties and receive soon-to-move-to-Pittsburgh hipsters looking for a future oasis. Shea was a generous host and an excellent in-person ad for the business, and I bought a bunch of cupcakes to take home to the family. She has no plans, she said, to sell cupcakes anywhere except through the store, so that she isn't tempted to compromise on quality. My inner foodie likes the line; my inner-amateur-entrepreneur wonders how long that will last. I saw cupcakes in Starbuck's last week.

With cupcake saturation, how long will people be willing to shell out $2.50 per cupcake -- anywhere? The cupcake market presents Clay Christensen's Innovator's Dilemma: Should you specialize, maintain your margins, and move upmarket? Low cost competitors will move in like sharks. Or should you give up those fat margins, maintain your market share, and commodify? You don't get rich, and you don't get new, but you stay in business. (Christensen's third way is to innovate outside the box -- challenge your own business model.) Right now, and reading the leading cupcake blog, the industry is betting on option one: fancier and purer cupcakes. Home bakers aren't hurting that business. But low-cost upscale cupcakes eventually will. When high end cupcakes come to Costco and Sam's Club, watch out -- or watch for branded cupcakes in a restaurant or coffee house near you.