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Fred Wilson is a constant source of intriguing chatter on the startup tech sector. Through his prolific blog, AVC, Musings of a VC in NYC, Wilson offers a revealing and insightful view of the venture capital process, and specifically his VC firm, Union Square Ventures which focuses on early stage startups.

Recently, Wilson blogged about the types of investments he’s looking to make in 2010. There were some predictable ideas (mobile technology and gaming), but one note caught my attention: “New forms of commerce and currency on the web.” Union Square Ventures was an early investor in Etsy, the popular online marketplace for handmade goods which I’ve noted numerous times on Merge, and Wilson laments that there aren’t more similar opportunities for buyers and sellers to congregate and do business online. He takes this a step further with the analogy of the San Telmo marketplace in Buenos Aires, which he suggests is a model for the type of experience that blends the social and commercial that is missing online now.

This is a point that I have been making recently as I’ve reflected on the iPhone app development boom and the combination of the iPhone Developer Program/iTunes Store that makes it so relatively easy to enter the market. I think the success of Etsy and iPhone apps demonstrates clearly that, when the path from idea to market is made simple, efficient, and inexpensive, designers and creative professionals will participate in a big way. I hope Fred Wilson’s prediction comes true and more such marketplaces begin to emerge in the year ahead. Please post a comment if you are seeing other examples that I’ve missed here.

What a year it has been! With a historically rotten economy, the design industry has taken a serious beating, leaving us all looking around to see who is still standing. The main theme of Merge is the idea that, in order to survive and thrive, designers must begin to look beyond the “client service” business model and explore ways to market their creative ideas in a more direct way. 2009 has certainly underscored the relevance of this point of view.

In reflecting on the year, five stories have emerged as central to the design and entrepreneurship convergence, for a variety of reasons. Some are simply emblematic of the unique time we are in, while others may offer a glimpse into the future for designers and creative professionals. Here they are (in no particular order):

1. iPhone App Development and the iTunes App Store

According to the website GigaOm, roughly $2.4 billion were spent on iPhone Apps in 2009. That’s a staggering number for a tech category that basically did not even exist a couple years ago. The good news is that this has emerged as an area in which a wide range of designers, web developers and creative professionals have been able to bring their product ideas directly to the consumer—I’ve written frequently about this phenomenon on Merge and profiled a couple of App developers with roots in the design world.

While the media has focused on the relative handful of “kitchen table” developers who hit the jackpot with app releases in the early months of the “app bubble,” I think the real story here is the iPhone Developer Program—the back-end machine that Apple has built to facilitate the process of development, sales, and distribution of these products. Without fail, when I ask would-be entrepreneurs what holds them back from pursuing a business idea, the complications—and expenses—related to the supply chain are cited as primary reasons. With the iPhone Developer Program, which feeds into the iTunes App Store, this complication has been greatly simplified.

Ironically, I see synergy between the Apple case study and other design-friendly online marketplaces, like Etsy or Mohawk Paper’s Felt & Wire Shop. My hope is that the success of these programs will inspire similar marketplace opportunities in other categories, hence making it easier for more designers to bring their ideas directly to the consumer.

Here are links to some of the posts I’ve written on this topic in 2009:
Discussing iPhone Apps with Terry Anderson
HartungKemp Gets Wasted
iPhone App Development Primer from The Nerdery

2. Necessity Entrepreneurs
Not all entrepreneurs are the same. While the classic entrepreneur is struck with that brilliant “aha” idea, and methodically develops it into a thriving business, many people starting new businesses today are doing so because they lost their job and have slim prospects for finding a new one. With the creative and design industries being particularly hard hit in this recession, one of the lasting stories from 2009 will undoubtedly be the high number of creative professionals who have opted to pursue an entrepreneurial venture rather than competing for the few remaining job openings.

While many of these new ventures will be built on the tried and true client service model, my hope is that we will see more products and services brought directly to the consumer by people with backgrounds in design, hence bringing the design sensibility and methodology to the process of building a new business.

Here’s a link to a post I wrote earlier this year about this topic:
The New Breed of Necessity Entrepreneurs

3. Service Design (or whatever you call it)
“Suddenly there is a whole population of designers trying to use their skills to have an impact on the world around them.” This is how Bill Drenttel of Winterhouse Institute and Design/Change Observer introduced the Aspen Design Summit in November. I would only argue with the “suddenly” part—in fact, I think designers have a deep heritage of working to make the world around them a better place dating back to the Bauhaus, so perhaps after decades of immersing in a relatively one-dimensional way of working, we are rediscovering how to apply our skills for a greater good.

The distinct practice of Service Design is more established in Europe than in the U.S., a result, in part, of the support and funding given to the design professions by many European governments. In fact, the term itself is not very common here—we might call it “design thinking,” “social impact design,” or even “new design.” While a single definition of Service Design is difficult to pin down, a common principle is that inter-disciplinary teams of professionals are using the methodology of design to engage in complex social problems like healthcare, poverty, and hunger.

2009 was filled with promising examples of designers putting their skills to work on such issues, as well as commenting and writing about it. Bookshelves were filled with new volumes by design gurus like Tim Brown of IDEO and Nathan Shedroff of CCA. INDEX presented their prestigious design award to Kiva, an institution that, seemingly, has nothing to do with design, provoking us all to rethink the parameters of our practice. And the Aspen Design Summit itself brought designers, policy makers, educators, and institutional leaders together for a vigorous exercise in design with a social impact emphasis.

My hope is quite simply that this trend continues, and that these exercises begin to spawn some meaningful success stories.

Here are links to some of the posts I’ve written on this topic in 2009:
Hillary Cottam and Participle
INDEX Announces a Surprising Winner
Continuing the Conversation About Service Design

4. Alternative Funding for New Business Ventures
Access to a relatively small amount of seed money can completely change the complexion of a startup business plan. As little as a few thousand dollars can allow a designer/entrepreneur to produce a run of prototypes or conduct valuable user testing. But not everyone can reach into their pockets and find that kind of cash, and traditional sources of funding like small business loans are much more difficult to come by than they were in better economic times.

That’s why the emergence of alternative sources of startup funding is such an important story right now. I’ve written several times about this in 2009 and I continue to be intrigued by the possibilities it offers. Microfinancing (also known as peer-to-peer lending), a model similar to the one used by Kiva where individual donors connect with individual entrepreneurs in an online venue, offers one way that designers can get that initial boost for their startup idea.

My hope is that alternative funding sources like microfinancing will continue to mature into a viable and stable option in the year ahead—and that more designers will take advantage of it.

Here are links to a couple of the posts I’ve written on this topic in 2009:
Microfinancing: A Model that can Work for Designers?
Peer-to-Peer Lending and Other Funding News

5. The Online Social Media Wave
Creative professionals have, for the most part, been early adopters to the online social media wave, and many of us have found ways to use it to enhance our business. This is a trend that has evolved at an explosive pace over the last few years—as evidenced by the recent story that Facebook overtook Google as the most-visited website in the U.S. on Christmas Day this year—and I don’t see it slowing down any time soon. While many of us have tired of the Facebook routine, Twitter, Flickr, YouTube and other online venues each provide distinct and unique ways to connect and interact.

One of the reasons I cite for designers not finding as much success as they should as entrepreneurs is that our professional networks are too narrow, and my view is that online social media provides a remarkable way to expand these networks and connect with the people who can help small businesses grow. My hope is that designers and creative professionals will continue to populate this online world (or to dive in right away if they haven’t already done so) and be involved in the continuing evolution of it.

Here’s a link to an earlier post on this topic:
Social Media 101

Picture 10I had the pleasure of presenting a series of workshops on design and entrepreneurship last weekend at AIGA Minnesota’s Design Camp. Held on the shores of Gull Lake in central Minnesota, Design Camp is a hidden gem among design conferences featuring internationally known speakers and a wide range of breakout content. Special thanks to AIGA MN for the invitation and the hospitality.

I always begin my workshop sessions by asking attendees what their reasons are for not pursuing a great business idea, and inevitably the top three are: money, time, and know-how. Essentially what I’m hearing is that the process is simply too daunting and complicated. So, I was intrigued and excited when Laura Shore, Senior VP of Communications and Innovation Strategy at Mohawk Fine Paper sent me an email announcing the launch of a new Mohawk project called the Felt & Wire Shop. Felt & Wire is a curated online marketplace showcasing products designed mostly by communication designers.

Picture 11

Moonbeam Clock by Pie Bird Press

The products on Felt & Wire all have a paper connection of some sort (not surprisingly), but the range is impressive. Stationery and gift cards, invitations, wrapping paper, posters, prints, and calendars by some of the top names in communication design: AdamsMorioka, Chen Design, and Grant Design Collaborative among many others. Some of my favorite pieces are from Pie Bird Press in Albany, CA, which features bold, graphic imagery with a blend of pop art sass and retro silkscreen charm.

Importantly, the submission and review process is streamlined and user-friendly. A simple online upload of jpegs and/or video and some background info and designers are one big step closer to bringing their ideas to market.

While curated online marketplaces for gift items are not a new phenomenon (Etsy, which launched in 2005, is one of the most prominent), Felt & Wire is unique in its clear focus on communication designers. I see a strong correlation between the Felt & Wire Shop and the machine that Apple has developed for the iPhone app development process. In both cases, the part of business development that intimidates most designers becomes so simple that it’s almost a non-issue. This highlights a big need—and opportunity—in the area of designer-driven entrepreneurship: I would love to see more venues like Felt & Wire that would allow designers working in other media to have this same speedy route to market. Along this line, I hope Mohawk will recognize how wide open this space is right now and expand the vision for Felt & Wire (nudge, nudge, Laura).

For those of you heading to Memphis this weekend for the AIGA Make/Think conference, check out the Felt & Wire booth. In the meantime, here is an excerpt from an email exchange Laura Shore and I had discussing the launch of Felt & Wire.

How did the idea for the Felt & Wire Shop come about?
Two years ago, I visited the New York Stationery Show for the first time and was blown away by the smaller, more creative booths. First of all, the work was fantastic. Second, as we spoke with exhibitors it was clear that many were using our paper for their products. How could we find a way to capture that energy and recommunicate it back out to the world? How could we help promote these micro-enterprises through our network of connections? As the idea percolated down, I started thinking of all the cool things I’ve received over the years from designers we’ve worked with. Every graphic designer I know is a closet product designer. They just don’t have a means of distributing their products. The retail market for someone in manufacturing and communications design seems byzantine. Quantities are tiny. I’ve never figured out how anyone could make money at it!

About that time I got an e-mail from Josh Chen, a great designer in San Francisco, who was selling product on a marketplace site. I discovered Etsy and started thinking about ways to connect the dots.

Were there models out there that you were emulating?
There are a number of marketplace sites out there that we took hints from.

How are products chosen to be in the shop?
The site is curated by a panel who manage the balance of content and also ensure that all the work meets our high standards.
You sign up on the site and submit your candidates. It’s very straightforward and intuitive. We want this to be a place where the press comes to see what’s best in paper-based design. And where the best designers will feel comfortable showing their work.

What about the type of products you’ll accept—is it just paper-driven?
We’ll consider anything that’s paper driven—or services that support paper-driven design. I’m still looking for lampshades, wallpaper!

Are there any sales trends you’ve been able to spot so far?
Still way too soon to tell but if my credit card is any indication, I think it will do very well.

What are the long term goals for the site?
Every day we have new ideas. We’re working on ways to support AIGA chapters and other non-profit design-driven organizations. We’d also like to find ways to connect designers to digital printers so that they don’t have to inventory everything they sell. I would like see posters and prints from my design heroes (and heroines). And if designers are true to form, I will be continually amazed by what product ideas come forward as candidates.

It seems like Mohawk may be positioning itself as a leader in designer-driven entrepreneurship, am I right?
We want to be a leader in a number of areas. I agree with you, there’s a huge void here!

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