Recently, I asked a question on Hacker News:
“Should monetization be an after thought for startups” ?
Normally, if you have a startup idea, you’re most likely going to evaluate its feasibility and do a SWOT analysis on the idea. However, given the current economic downturn, you’ll most likely also need to dissect the idea based on ‘how are you going to make money’. Clearly, an ad based business model is not going to work in the given market conditions.You’d need a sustainable revenue model to keep things going.
The problem is — the moment you start applying the ‘how will I make money’ principle to the idea, a lot of your ideas turn into vaporware. At least thats what happened to me.
The suggestion that several readers provided was to throw an idea against the wall and see if it sticks. In other words, implement the idea and see if it works or fails. If it fails, fail faster and fail cheaper.
What are your thoughts ?
What about the money that goes into implementing that idea? How many ideas can you throw against the wall and watch them unstick before you get thrown out of your apartment?
cyril,
i’m assuming you can code the site yourself. if you need to outsource the dev, design etc..this approach may not be viable.
thanks to web dev frameworks like django && rails, web development has become incredibly easy (not to mention these frameworks have a lot of reusable apps as well)
Agreed with you Pranav on web development tools that make it easy to customize and make the site go live faster and cheaper.
I do believe that all startup ideas could be simplisticly classified into two categories:
- Ideas with a killer business model (Very few exist in this category)
- Ideas with with not-so-clear business model (Most of the great ideas fall into this, ex: Twitter, Facebook, Google)
Most of the ideas fall in the second category. And, most of the great businesses are built on the basis of second category. Take a look at Google for example. Their idea in the beginning was very simple, “me too” idea given the fact that Yahoo and Altavista search was already there. Then, they evolved based on their great search offering, and the business model evolved over a period of time. It would have been difficult to build a company like Google or Twitter if the monetization aspect was thought in the earlier stage. Facebook is still struggling for a great business model given the fact that they are funded $500 Million Plus.
To end, I would say that the most important thing that we would like to think in the beginning is about “Killer Value-Addition”. Ask simple questions like following:
- Am I going to use my website to benefit myself?
- Will I get satisfied by value-offerings?
- etc etc..
Google could have said in the beginning..Yes, this would have users do search faster and great results…
cheers!
ajitesh,
thats well put. But, let me ask you this — how many sites do reach the scale of google/ youtube or FB ?
about the value addition — often times, a founder might be oblivious to the actual benefit that a user stands to gain — which could be much less than the perceived value by the founder.
I think its very important to plan for revenue from the beginning. It’s a business, unless you make money it won’t last. We know of the success stories, like Twitter, FB and Google, which are few by any count. The failures will be far larger in number.
Very often, if you are an coder, you will think that its so easy to put together an idea online and just do it.. without much thought on monetization/marketing.. but that’s the whole point to entrepreneurship. Figuring out how to make money on an idea.
A product is not just the offering, its also the pricing. You can make it, but can you sell it?
chica,
thats the main point — ‘what am i selling’ ? providing a service/app is fine. but unfortunately, monetization on the web is still not so trivial..
Agreed Chica! All I say is if we give so much importance to planning revenue right in the beginning, we tend to take ourselves away from “Ocean undiscovered”, or “Path less travelled” because we could agree on the fact that a revolutionary idea could open never-thought or never-imagined new revenue channels which is worth lot more than what was thought in the beginning. “Google adsense” is classic example in that manner.
Revenue planning is important but not the most important as there is a danger that it could kill innovation right at the beginning!
Forget about revenue… if the idea is good it will work….. and either some one will buy you out or you will get funding from a VC or angel.
What you offer is more important than money. Youtube was supposed to be a video version of hotornot
look what it turned into
I agreed with ajitesh, only those can think about “revenue” from the first day of startup who can not make anything “different”, as he would focus on ventures which has no risk. Example of Google and YouTube is appropriate here.