An interesting discussion of Web 2.0 business models is over on Ajit Jaokar’s blog.
I’m on vacation (er, cleaning out the garage isn’t quite what I wanted to do with my vacation time) so am thinking about such things cause I’m joining a Silicon Valley startup company that got $5.5 million in funding. Now, I am pretty naive, but one thing I’ve learned in my life is that VC’s want their money back. Oh, and they are hoping you’re gonna give them nine more bags of money the same size along with that payback.
Life isn’t easy for entrepreneurs and the pressure is on. What do I do to add value? $30 million worth?
Whew, that’s a challenge. Any ideas?
Hmmm, I can’t pay for ideas. But I do have this little thing called Google PageRank. How about you give me an idea and I’ll link to it? It’s a trade, but it’s the only one I got cause they haven’t given me a corporate credit card yet. Heheh.
Anyway, one myth of creating a Web business is that all that matters is getting a big audience. Absolutely NOT true.
Remember that I talked about my house and it got linked to all over the place? Well, Stan, our realtor, was amazed at the hit rates his pages were seeing. But, Maryam and I were telling ourselves “we don’t care, we just want a buyer.”
That’s a lot like how advertisers look at the world. You think they are paying millions of dollars for WorldCup ads just cause they like football? Heheh. No, they are fishing that giant sea of billions of viewers trying to find enough to pay for the ads.
Now, I would have paid $1,000 to find one buyer. Why? Cause the upside was so large. When you’re selling a house for $450,000 giving up $1,000 isn’t a big deal.
Did you know that mortgage companies are paying $60 everytime you click on their ads? Everytime! Why? Cause they know that if they get one customer it’ll pay that back and more.
So, how do you find buyers? Well, this is why I study Google keywords so much. Buyers tend to use search engines to find things. If you’re looking to buy a camcorder, where are you going to go? How about Google or Yahoo to do a search on “camcorder?”
Here, what’s more profitable? Camcorder or “World peace?” Now, you might be able to intuit that camcorder is worth more, right? But do you do a scientific analysis on that? That’s what tools like Nichebot are for.
Anyway, if you’re in the Web world there’s not too many ways to make money. One is by selling things (houses, books, etc). Another is by providing services (plumbing, lawyering, teaching). Another is by building audiences of buyers and then showing them things that sellers are offering (Google does this, so does eBay).
Hmmm, I almost erased this whole post cause it just is boring to most people to think about business models. But, I enjoy reading about business models. Some of my favorite bloggers, like A VC Fred, writes regularly about business models. There’s lots of blogs out there talking about business models too.
Fun reading while I’m avoiding cleaning out the garage.
Scobleizer 
Heh – I know how easy it is to read blogs (or email, or browse YouTube) instead of doing something as boring as cleaning a garage. So I play little games with myself – “Finish that corner of the garage, and you can spend 30 minutes reading email”, or “Paint that wall, then you can read blogs for an hour”. Sucks I gotta motivate myself this way, but I don’t have awife making sure I get things done, so it would be oh so easy to just do nothing, except read blogs, and leave meaningless comments. Damn. Time to finish mopping the kitchen. Be back in 30 minutes!
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Heh – I know how easy it is to read blogs (or email, or browse YouTube) instead of doing something as boring as cleaning a garage. So I play little games with myself – “Finish that corner of the garage, and you can spend 30 minutes reading email”, or “Paint that wall, then you can read blogs for an hour”. Sucks I gotta motivate myself this way, but I don’t have awife making sure I get things done, so it would be oh so easy to just do nothing, except read blogs, and leave meaningless comments. Damn. Time to finish mopping the kitchen. Be back in 30 minutes!
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More! Reading about business models is how I’m learning and developing my own business model…little tidbits of knowledge and wisdom all add up.
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More! Reading about business models is how I’m learning and developing my own business model…little tidbits of knowledge and wisdom all add up.
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“Now, I would have paid $1,000 to find one buyer. Why? Cause the upside was so large. When you’re selling a house for $450,000 giving up $1,000 isn’t a big deal.”
If realtor commissions are anything like here — I think you will end up paying much more then $1000 to Stan to sell your house.
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“Now, I would have paid $1,000 to find one buyer. Why? Cause the upside was so large. When you’re selling a house for $450,000 giving up $1,000 isn’t a big deal.”
If realtor commissions are anything like here — I think you will end up paying much more then $1000 to Stan to sell your house.
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Sent you an email with a business model idea, but since you use hotmail, I thought I’d tell you here in case the spam filter caught it.
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Sent you an email with a business model idea, but since you use hotmail, I thought I’d tell you here in case the spam filter caught it.
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Brian: I’m talking about $1,000 on top of Stan’s fees.
Brandon: I got it, thanks!
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Brian: I’m talking about $1,000 on top of Stan’s fees.
Brandon: I got it, thanks!
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OK, if you want ideas (I really think that should have been in a seperate post though):
Cut down on the tacky intro music, introductions, and basic BS. I download a podcast that says it is 13 minutes long and I get maybe 8 minutes of content out of it. This isn’t “60 Minutes”, and we don’t need the intro music. It is annoying, it wastes my time, and I really just want to shut the podcast off at that point. If someone feels they MUST put this stuff in, put it at the end of the podcast, not the beginning – because chances are if you front load your gratuitous stuff, I won’t get through it, much less beyond it to what I would assume is eventually content.
Instead, post an Introductory Podcast for each feed – that’s where you can tell what the podcast is about, play the funeral dirge music, whatever. But the same 2 minute lead-ins on some of these podcasts are just annoying, especially on really short podcasts. It makes me feel like I am sitting in the theater at the time the movie was SUPPOSED to start, watching ads for 20 minutes before I get what I actually paid for.
Another idea would be to put all the lead in stuff in Podcasts that are directly downloaded, but not in the RSS feeds – the assumption would be that if I have subscribed, I know what I’m listening to, so I have no reason to listen to it installment after installment.
I wonder how much space these lead-ins are wasting on my MP3 Player? I wonder how many more PodCasts I might be able to download, and listen to if I had that extra space?
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OK, if you want ideas (I really think that should have been in a seperate post though):
Cut down on the tacky intro music, introductions, and basic BS. I download a podcast that says it is 13 minutes long and I get maybe 8 minutes of content out of it. This isn’t “60 Minutes”, and we don’t need the intro music. It is annoying, it wastes my time, and I really just want to shut the podcast off at that point. If someone feels they MUST put this stuff in, put it at the end of the podcast, not the beginning – because chances are if you front load your gratuitous stuff, I won’t get through it, much less beyond it to what I would assume is eventually content.
Instead, post an Introductory Podcast for each feed – that’s where you can tell what the podcast is about, play the funeral dirge music, whatever. But the same 2 minute lead-ins on some of these podcasts are just annoying, especially on really short podcasts. It makes me feel like I am sitting in the theater at the time the movie was SUPPOSED to start, watching ads for 20 minutes before I get what I actually paid for.
Another idea would be to put all the lead in stuff in Podcasts that are directly downloaded, but not in the RSS feeds – the assumption would be that if I have subscribed, I know what I’m listening to, so I have no reason to listen to it installment after installment.
I wonder how much space these lead-ins are wasting on my MP3 Player? I wonder how many more PodCasts I might be able to download, and listen to if I had that extra space?
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kr8tr: that’s actually an awesome point! And, the first sixty seconds should be the best stuff.
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kr8tr: that’s actually an awesome point! And, the first sixty seconds should be the best stuff.
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Heh – new record for me – three comments on one post! But I was just thinking that there are more than three ways to make money of the Internet – you forgot “deception”. Spamming. scamming, and porn. What would my inbox look like everyday without pleas from Nigerian bankers or offers to get “Ha_rdR, FastR with ViaaGr-AA”?
And what about things like “Second Life” – they are making money, but I don’t think they fit in your three categories. In fact, Second Life probably comes closer to my forth category – not saying it’s spamming or scamming or anything like that, but it is escapism. It’s like selling a “virtual cruise” – Calgon, take me away type stuff.
Is there money in providing escapism? Hell yes – look at the online poker business! So I guess the fifth way would be “escapism” – although I imagine you could put porn in that category intead of spamming and scamming if that was the content the user WANTED to see.
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Heh – new record for me – three comments on one post! But I was just thinking that there are more than three ways to make money of the Internet – you forgot “deception”. Spamming. scamming, and porn. What would my inbox look like everyday without pleas from Nigerian bankers or offers to get “Ha_rdR, FastR with ViaaGr-AA”?
And what about things like “Second Life” – they are making money, but I don’t think they fit in your three categories. In fact, Second Life probably comes closer to my forth category – not saying it’s spamming or scamming or anything like that, but it is escapism. It’s like selling a “virtual cruise” – Calgon, take me away type stuff.
Is there money in providing escapism? Hell yes – look at the online poker business! So I guess the fifth way would be “escapism” – although I imagine you could put porn in that category intead of spamming and scamming if that was the content the user WANTED to see.
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Here’s the idea – widgetise it. Widgetise Podtech. Let people choose a category of podcasts and put a widget wherever they want. Then you reap the distribution benefits.
You have to 1. give the widget user freedom to use 2. understand what the incentive is for the widget user and 3. make it very very simple to get and update widgets.
Well, you can come and talk to us at Snipperoo about how all of this can work for everyone – we’re inventing the widgetsphere over here.
Once you’ve become embedded in a few million personal sites, blogs, whatever, you will be very hard to displace, you will own that distribution channel and your value will skyrocket!
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Here’s the idea – widgetise it. Widgetise Podtech. Let people choose a category of podcasts and put a widget wherever they want. Then you reap the distribution benefits.
You have to 1. give the widget user freedom to use 2. understand what the incentive is for the widget user and 3. make it very very simple to get and update widgets.
Well, you can come and talk to us at Snipperoo about how all of this can work for everyone – we’re inventing the widgetsphere over here.
Once you’ve become embedded in a few million personal sites, blogs, whatever, you will be very hard to displace, you will own that distribution channel and your value will skyrocket!
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“We don’t care – we just want a buyer.”
Now there’s the central tragedy – and problem – of all people who are trying to sell something, whether it’s Mr. & Mrs. Scoble or MEGACORP. Everybody’s w-a-y to impatient, and wants to get to instant gratification too fast.
I’ve always believed that the key to understanding selling is to understand buying, and I’m pretty sure that’s as true in WEB2.0land as it is in the rest of the universe.
And what we know about how you and I buy is that, unless it costs 99 cents, we shop around and go through a buying process, using ever finer filters. In the case of buying a service, it’s something like:
a) Who’s out there that can help?
b) Who’s qualified for our situation?
c) Who’s got references?
d) Who’s earned enough of our trust to be chosen?
WEB2.0 businesses can add value any any stage of this process, but I suspect too few have thought about it as a series of stages, each requiring it’s own approach. Helping sellers create awareness is a very different process than helping them provide refernces (the community) versus helping them convey and earn trust.
New-world marketers need to remember old-world buying!
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“We don’t care – we just want a buyer.”
Now there’s the central tragedy – and problem – of all people who are trying to sell something, whether it’s Mr. & Mrs. Scoble or MEGACORP. Everybody’s w-a-y to impatient, and wants to get to instant gratification too fast.
I’ve always believed that the key to understanding selling is to understand buying, and I’m pretty sure that’s as true in WEB2.0land as it is in the rest of the universe.
And what we know about how you and I buy is that, unless it costs 99 cents, we shop around and go through a buying process, using ever finer filters. In the case of buying a service, it’s something like:
a) Who’s out there that can help?
b) Who’s qualified for our situation?
c) Who’s got references?
d) Who’s earned enough of our trust to be chosen?
WEB2.0 businesses can add value any any stage of this process, but I suspect too few have thought about it as a series of stages, each requiring it’s own approach. Helping sellers create awareness is a very different process than helping them provide refernces (the community) versus helping them convey and earn trust.
New-world marketers need to remember old-world buying!
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It probably wouldn’t hurt to properly optimize podtech for the search engines. I imagine you’re missing out on a ton of potential traffic.
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It probably wouldn’t hurt to properly optimize podtech for the search engines. I imagine you’re missing out on a ton of potential traffic.
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You, and now Podtech by association, are something of a VC yourself in the Web 2.0 world. Except instead of VC, you’re an AC: Attention Capitalist. People have ideas. You have attention. Good ideas + attention = profit. What about using a VC-type business model but instead of funding ideas with cash, funding them with attention? And in exchange for attention, successful ideas would repay you with a cut of their profit (I sent you an idea last week with one example, sure there are lots more/better ones out there).
Also, I’ve been evaluating my podcast listening habits lately and have seen two main trends in the types of podcasts I listen to on a regular basis. They are either entertaining or educational. However my favorites (Diggnation, Lost Podcast with Jay and Jack) have both. From the podcasts I’ve listened to from Podtech so far, they are great sources of information, but not necessarily the most entertaining. I’d suggest infusing more fun into the wealth of info. Acq-hiring the GETV crew was a great first step, looking forward to seeing more along those lines.
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You, and now Podtech by association, are something of a VC yourself in the Web 2.0 world. Except instead of VC, you’re an AC: Attention Capitalist. People have ideas. You have attention. Good ideas + attention = profit. What about using a VC-type business model but instead of funding ideas with cash, funding them with attention? And in exchange for attention, successful ideas would repay you with a cut of their profit (I sent you an idea last week with one example, sure there are lots more/better ones out there).
Also, I’ve been evaluating my podcast listening habits lately and have seen two main trends in the types of podcasts I listen to on a regular basis. They are either entertaining or educational. However my favorites (Diggnation, Lost Podcast with Jay and Jack) have both. From the podcasts I’ve listened to from Podtech so far, they are great sources of information, but not necessarily the most entertaining. I’d suggest infusing more fun into the wealth of info. Acq-hiring the GETV crew was a great first step, looking forward to seeing more along those lines.
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Robert,
(At the risk of appearing like a wanton link-beggar,) We’ve put up a new topic on Grupthink to try and help you answer the questions you posed in this post. It’s here if you’re interested: http://www.grupthink.com/poll/1732
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Robert,
(At the risk of appearing like a wanton link-beggar,) We’ve put up a new topic on Grupthink to try and help you answer the questions you posed in this post. It’s here if you’re interested: http://www.grupthink.com/poll/1732
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Robert,
A technique I have used recently to try and come up with new ideas comes from a great book called “The Blue Ocean Strategy”. It basically boils down to the acronym EREC…Eliminate, Reduce, Enhance, Create.
In other words, which of the factors that your industry takes for granted can be eliminated?
Which factors should be reduced well below the industry’s standard?
Which factors should be enhanced and raised well above the industry’s standard?
Which factors should be created that the industry has never offered?
The first question forces you to focus on factors taken for granted that may no longer offer any real value or that may even detract from value.
The second question forces you to determine what factors may have been overdesigned perhaps in an effort to keep up with the competition, thus increasing costs.
The third question pushes you to uncover and eliminate the compromises the industry forces customers to make.
And the fourth questions pushes you to analyze what entirely new sources of value there are for customers there are that you can create.
Answering these questions will usually show you ways that you can reduce your cost structure relative to your competitors while also providing insight into how to lift value to the customer and create new demand.
Its a great book. You should check it out if you haven’t already. I think it might help.
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Robert,
A technique I have used recently to try and come up with new ideas comes from a great book called “The Blue Ocean Strategy”. It basically boils down to the acronym EREC…Eliminate, Reduce, Enhance, Create.
In other words, which of the factors that your industry takes for granted can be eliminated?
Which factors should be reduced well below the industry’s standard?
Which factors should be enhanced and raised well above the industry’s standard?
Which factors should be created that the industry has never offered?
The first question forces you to focus on factors taken for granted that may no longer offer any real value or that may even detract from value.
The second question forces you to determine what factors may have been overdesigned perhaps in an effort to keep up with the competition, thus increasing costs.
The third question pushes you to uncover and eliminate the compromises the industry forces customers to make.
And the fourth questions pushes you to analyze what entirely new sources of value there are for customers there are that you can create.
Answering these questions will usually show you ways that you can reduce your cost structure relative to your competitors while also providing insight into how to lift value to the customer and create new demand.
Its a great book. You should check it out if you haven’t already. I think it might help.
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Some vague, quickly written, pre-coffee thoughts…
1. Implement audio search of your podcasts (yes, searchable audio). It can be done.
2. Buy a real domain name (it’s .com or nothing) — and don’t give me any it’s the .net in .network shit. 🙂
3. Decomplicate the home page. I struggled (seriously) to figure out who podtech was targeting, and then, assuming I was someone in that target category, what I was being offered. Just tell me point blank.
4. Admit you’re just a news site — then either move on to something new or fully embrace your destiny.
5. Revenue will come from audience, which means you’ll likely need to move beyond technology and you’ll need to increase the content volume. Also consider empowering others with podtech’s technology (if it actually has any) through a licencing model.
6. Get exciting content.
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Some vague, quickly written, pre-coffee thoughts…
1. Implement audio search of your podcasts (yes, searchable audio). It can be done.
2. Buy a real domain name (it’s .com or nothing) — and don’t give me any it’s the .net in .network shit. 🙂
3. Decomplicate the home page. I struggled (seriously) to figure out who podtech was targeting, and then, assuming I was someone in that target category, what I was being offered. Just tell me point blank.
4. Admit you’re just a news site — then either move on to something new or fully embrace your destiny.
5. Revenue will come from audience, which means you’ll likely need to move beyond technology and you’ll need to increase the content volume. Also consider empowering others with podtech’s technology (if it actually has any) through a licencing model.
6. Get exciting content.
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you`re lucky – we are still searching fpr money from a VC! But it is getting more and more difficult to get the money back – we are just in the end of a big bubble called web2.0!
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you`re lucky – we are still searching fpr money from a VC! But it is getting more and more difficult to get the money back – we are just in the end of a big bubble called web2.0!
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