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Stop asking how they'll make money  

Interesting view from Andrew Chen, who says:

Between the original dotcom bubble versus now, a lot has changed for consumer internet companies. Thankfully, monetization is now a boring problem to solve because there's a ton of different options to collect revenue that didn't exist before:

  • There's 200+ ad networks to plug into
  • Payment providers like Paypal, Amazon, Stripe
  • "Offer walls" like Trialpay
  • Mobile payment solutions like Boku
  • … and new services coming out all the time (Kickstarter)

Andrew cogently makes the point that the market today is 2 billion people on fast connections, rather than 100 million people on dial-up, as it was during the previous bubble. Therefore, he argues:

The point is, the consumer market has grown by so much that the upside opportunity is tremendous if you get a product exactly right. Given all the growth opportunity, and given the plug-in revenue models, the main bottleneck for building a great company doesn't seem to be the business model at all.

In fact, the business model seems like a second or third order problem. So again, I argue, let's stop asking about it.

Followers of swombat.com know that I'm not a fan of moon-shot approaches, at least not for first-time entrepreneurs. They are risky and difficult to pull off, and inexperienced entrepreneurs are very likely to fail to even get the basic business aspects right, let alone have a shot at failing because of some original, interesting problem with their specific idea.

However, if you know what you're doing, then by all means, go for the lottery leagues. I can only agree with Andrew that:

At over 450 million uniques per month, let's stop wondering what Twitter's revenue model will be. Obviously it will be some form of advertising, and maybe they'll experiment with freemium or transaction fees somehow. You can debate if you think they will ultimately be a $100B company or a $10B one, but let's skip the conversation on whether or not they'll fail because they don't have a business model.

If you can build a product used by hundreds of millions of people (which is insanely hard), you will make money somehow, no doubt.

More from the library:
The cost of funding may be your freedom
The 90/10 rule
Not all products need to be pain killers