A lot of questions surrounding startups and Internet companies revolve around money. What is their business model? How will they make money? I don’t see how they will ever make money! Look at Facebook; they have close to a billion loyal customers and people still worry that they won’t be able to make money.
A while ago, I spoke to the CEO of a very large company (80,000 employees worldwide) who asked me “What do you think about the Facebook valuation? I don’t see how they will ever make any money.” I was surprised and asked him the following rhetorical question: ‘So you are saying that if I gave you access to 900 million loyal users you wouldn’t find a way to make money off of them?’
Of course you would! After all, all you have to do is apply one of the obvious 9 types of business models and you are done. Well, almost.
The real challenge is staying relevant to those millions of users. History is filled with people make the same obvious mistakes. They see a technology and might even see how it will become popular but then fail to grasp the fact that anything that is popular, anything that is valuable to a group of people, can me monetized.
To make it even simpler: Twitter and Facebook are tools that connect me to an audience that ultimately make or save me money. Therefore I’m fine with spending some money to make even better use of these tools. And I would certainly pay money if the alternative would be that I would no longer have access to them. A Twitter pro account for $15 a month? Sure, I’ll take it.
Here are a few examples of smart people who just couldn’t see how some new innovation could ever generate revenue. Stop asking yourself that question. Just ask yourself if it will have value for its users and if the answer is yes, then money will be made, one way or another.
They will never try to steal the phonograph because it has no ‘commercial value.’
- Thomas Edison (1847-1931). (He later revised that opinion).
While theoretically and technically television may be feasible, commercially and financially I consider it an impossibility, a development of which we need waste little time dreaming.
- Lee DeForest, 1926 (American radio pioneer and inventor of the vacuum tube).
Radio has no future.
- Lord Kelvin (1824-1907), British mathematician and physicist, ca. 1897.
“Drill for oil? You mean drill into the ground to try and find oil? You’re crazy.”
- Workers whom Edwin L. Drake tried to enlist to his project to drill for oil in 1859.
[Television] won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.
- Darryl F. Zanuck, head of 20th Century-Fox, 1946.
This `telephone’ has too many shortcomings to be seriously considered as a practical form of communication. The device is inherently of no value to us.
- Western Union internal memo, 1878.
“There is no reason anyone would want a computer in their home.” — Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977.
“The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?”
– David Sarnoff’s associates in response to his urgings for investment in the radio in the 1920s.