Comments on: Internet entrepreneurs, is it really all about the money?

By: Social networks making money through giving presents

Social networks making money through giving presents — Thu, 24 Jan 2008 10:48:07 +0000

[...] weeks ago we ran a story about the main problem of Facebook: monetization. Dave McClure, an internet expert from the Valley, [...]

By: FI

FI — Mon, 14 Jan 2008 11:30:22 +0000

Your vision on this concept is absolutely perfect. I would vote for you.

By: Earning money.

Earning money. — Mon, 14 Jan 2008 09:43:41 +0000

Nice post. You have many points said in your post. But the fact is that successful entrepreneurs are only those who earn their money by executing good ideas and primarily by serving the users. Success achieved by deceiving the users is only temporary which ultimately will lead to the downfall of their own business.

By: Martha

Martha — Sun, 13 Jan 2008 13:20:15 +0000

Ernst-Jan,
You are vey correct that this should be about building a good product that makes your users happy, unfortunately reality is that the VC train ride is a tough and unpredictable. I agree with @Oliver, VCs want their targets hit and revenue streams established sooner than later, the employees want to be paid, and your users want reliable service. This all places the startup entrepreneur in the impossible position of spinning the achievements to suit the audience.
I don’t envy them the never ending stress of checking numbers and reformulating strategies, not to mention trying to figure out how to monetize their product.

By: Jack

Jack — Sun, 13 Jan 2008 11:50:26 +0000

Interesting post, Ernst-Jan. I’d say that there are two main types of web entrepreneurs (there are probably loads of sub groups, but that complicates my argument) ;)

1.) The Entrepreneur whose primary motivation is making a ruck of cash.

For this entrepreneur the web is just a tool for making money. They might not need to do anything ground breaking to achieve this and instead will use the web to be financially successful by developing simple sites that turn a profit.

The adult sector would be a good example of this. The sites developed aren’t technically anything out of the ordinary – there are probably a hundred thousand that are almost identical. Instead for this entrepreneur, financial success comes from good SEO and SEM. There are loads of other examples of sites like this and entrepreneurs who have built their businesses this way.

Directory site offerings would also fall in this category. Most are nothing extraordinary, yet through aggressive telesales and intelligent SEO, these sites can make their founders financially successful.

2.) There is then the entrepreneur who wants cash, success and influence but who plans to achieve this by executing a ‘big idea’.

They’re the sort of people who are absolutely passionate about the power of the internet to change the status quo. I’m guessing that when they have an idea they get equally fired up about it and, rather than shelving it, take the punt of developing it.

This entrepreneur would still want the riches that comes with success but would expect to achieve these via the execution of their idea rather than by taking the more rational approach displayed by entrepreneur ’1′ above.

By: Steven Carroll

Steven Carroll — Sun, 13 Jan 2008 09:25:35 +0000

Great article, this is one of my problems with this climate we are in right now, muscle men, are taking over with the sole intention be to profit.

In my mind profit comes from value that you create. Thus the motto goes create something great and you will be rewarded. The problem however, at the moment is that there are so many competitors who have serious finical power trying to muscle their way in, they are given everything of value away, it’s who can give it away the quickest wins (they think), but in the stock markets that’s equivalent of a Bear market.

http://en.wikipedia.org/wiki/Bear_market

So while everyone is running around thinking how this is a boom, in fact it is very much the opposite, but in disguise because the revenue being pumped in is artificially distorting the real picture.

By: Yaniv

Yaniv — Sun, 13 Jan 2008 07:18:01 +0000

The ultimate thing for a web startup is doing a great service that people will pay for.
Will someone pay $5/month for a Facebook account? I don’t think so…
But will you pay to backup your important images?(www.smugmug.com) Or to watch a a live football game (www.mediazone.com)?

The key is being able to provide a service that has a real value for its users and real value is measured by cash…

By: Oliver Taco

Oliver Taco — Sun, 13 Jan 2008 01:11:53 +0000

As a grizzled and well whopped startup vet, I can tell you that anyone who doesn’t know where their revenue is coming from is either young (cough) or a d*mn fool. Or both sometimes.

Now, you don’t have to be right, but you had better be paying a lot of attention to how you’ll handle minor matters like salary and benefits when time comes to get out of the VC trough.

It’s why Amazon is still here and Boo ain’t. And why google and MS will be here when people are laughing about Facebook and MySpace in the 2010 issue of Wired.

-OT

By: dave mcclure

dave mcclure — Sun, 13 Jan 2008 00:29:58 +0000

thanks for the link & reference.

re: your comments above, i don’t think making money & “loving your users” are mutually exclusive. on the contrary if you really are creating something of value for your users, then there’s likely an avenue to making money, either directly via ecommerce or subscription, or indirectly via ads & sponsorship.

however, if you continue giving away a service that *never* monetizes it’s probably not sustainable.

“loving your users” could also be interpreted as being around for the long haul to provide a great service. doing that for free forever probably isn’t advisable.

fortunately I think you can find a happy medium between love & money ;)