That’s the phrase I kept thinking of over and over again as I watched Apple’s keynote yesterday: commoditize everyone else’s business. Apple makes its money on hardware. To make hardware more valuable, Apple needs a series of products and services around it that are cheap or free. This includes content, apps,  accessories and services.

Watch Apple in action. Apps are moving toward free (or at least freemium). Apple has repeatedly fought to keep music and book prices lower than the publishers of said content want, going so far as to be sued by the US Government over its position. iCloud, Apple’s services offering, is free. Now OS X Maverick, iWork and iLife apps all join iOS 7 as free software. This is some amazingly powerful and capable products, all at no charge for customers… except you have to buy the hardware.

Apple isn’t alone. Microsoft mastered this approach for years, making software valuable while commoditizing the hardware business. This is why no Windows computer manufacturers are making any money on the hardware. And of course Google has been playing its own commoditization game, making operating systems and apps free while maximizing the value of ads.

It’s important to note that each of these three are staring at each other’s businesses, each trying to outdo the others. When it comes to building a successful business (meaning revenues and profits, not market share) the question is which will win. Microsoft clearly is losing out right now in the mobile space while Google and Apple take charge. It is no coincidence that the two companies who are winning in the mobile market are primarily aiming to commoditize Microsoft’s software business.

But Google really hasn’t aimed at Apple yet and Apple really hasn’t aimed at Google yet. Do one of them win? Or does it open the door for a third-party — say Amazon — to step in and make content king while commoditizing everything else?

“Nobody tells this to people who are beginners, I wish someone had told me. All of us who do creative work, we get into it because we have good taste. But there is this gap. For the first couple years you make stuff, it’s just not that good. It’s trying to be good, it has potential, but it’s not.

“But your taste, the thing that got you into the game, is still killer. And your taste is why your work disappoints you. A lot of people never get past this phase, they quit. Most people I know who do interesting, creative work went through years of this. We know our work doesn’t have this special thing we want it to have. We all go through this. And if you are just starting out or you are still in this phase, you gotta know its normal and the most important thing you can do is do a lot of work.

“Put yourself on a deadline so that every week you will finish one piece. It is only by going through a volume of work that you will close that gap, and your work will be as good as your ambitions.

I took longer to figure out how to do this than anyone I’ve ever met. It’s gonna take awhile. It’s normal to take a while. You’ve just gotta fight your way through.”

– Ira Glass, On Storytelling

Larissa MacFarquhar, in a 2012 New Yorker profile of Clayton Christensen:

In industry after industry, Christensen discovered, the new technologies that had brought the big, established companies to their knees weren’t better or more advanced – they were actually worse. The new products were low-end, dumb, shoddy, and in almost every way inferior. The customers of the big, established companies had no interest in them – why should they? They already had something better. But the new products were usually cheaper and easier to use, and so people or companies who were not rich or sophisticated enough for the old ones started buying the new ones, and there were so many more of the regular people than there were of the rich, sophisticated people that the companies making the new products prospered.

Very important thinking and one very viable way to attack an existing market, one I’m exploring right now.

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via Ben Thompson

Fascinating first chapter of a book about Jim Henson and how he mixed art with capitalism:

The dance involves art and money, but not at the same time. In the first stage, it is paramount that the artist “reserves a protected gift-sphere in which the art is created.” He keeps money out of it. But in the next two phases, they can dance. The way I see it, Hyde’s dance steps go a little something like this:

1. Make art.
2. Make art make money.
3. Make money make art.

It is the last step that turns this dance into a waltz—something cyclical so that the money is not the real end. Truly, for Jim Henson, money was a fuel that fed art.

This so succinctly sums up how I’ve approached Infinity Softworks the past two years. We are about to release what I consider our art, Equals, but it doesn’t make money yet. So we’ve used our craft to make money. Contract work fills in the gaps. Hopefully over time, our increased skills and Equals itself will generate money, allowing us to make more art.

I grew up poor. At one point we were on food stamps. I never understood the relationship between art and money. In my early life I saw money as a corrupting evil. Over the last dozen or so years, though, my opinion has changed. Now I see it as an ends to a means, where the means is my ability to make more art.

Fascinating infographic from Keynotopia on the challenges impacting designers, entrepreneurs and product managers [1]. One that jumped out at me regarding Bootstrapping:

Most entrepreneurs we surveyed said they prefer to take the time to bootstrap their business slowly and steadily, rather than raising money from investors and growing too fast too quickly. The biggest challenge is to generate revenue while bootstrapping: to acquire enough customers and have them pay for the product.

Huge challenge. There is a time and place for funding. The right investors can help accelerate a business in amazing ways. The wrong investors will sink the business before it starts. Investors have their own agendas and time frames. Some businesses, especially in the early days, don’t fit those kinds of timelines. Thus we get acquihires for businesses that, if they had grown more organically, could have been amazing businesses.

I have to admit that funding is inviting. The idea of working with really smart people, surrounding myself with a team of dedicated people trying to do amazing things, is really exciting. And sometimes it seems like every company is funded. But that’s not true. In fact the majority of business, technology or otherwise, are not funded by anyone but the founders and maybe a loan.

Those with funding dismiss those without by calling them “lifestyle” businesses, a derogatory term that implies we just aren’t serious. But that’s not true either. I work as hard as any funded company does.

I’m just not ready to take other people’s money.

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[1] I’m a customer.

[2] Buy the company to get the employees.