I hope everyone has read this article http://www.wired.com/techbiz/it/magazine/16-03/ff_free?currentPage=all it has a great list of potential ways a free service can generate revenue. Or for the digest version, Armano's visualization http://darmano.typepad.com/logic_emotion/2008/10/the-4-kinds-of.html
It's perfectly reasonable for a startup to consider getting usage first before having a solid business model. As Andreensen says, distribution is your biggest challenge. Then again, Reid Hoffman emphasizes funding strategy. If you have a good funding strategy, you have time to solve both the distribution and revenue challenges. It depends (to quote circa 1997 Jared Spool) also on the market you are in. In an enterprise market (B2B) its useful to take a Four Steps to the Epiphany approach, where you test your business strategy with your potnetial customers from day one. But in the consumer internet businesss, especially advertising based, overempahsis on business model will often result in making decisions that limit usage and growth in exchange for early profitability. Morover, in new categories, like social networks, there is no accepted model for profitability so it's difficult to know what will succeed. You could easily argue that while search existed for many years, it only found its business model when overture invented the auction-based keyword bidding approach. If I were Zuckerberg, I wouldn't put a timetable on finding a business model. There are a number of them that might work and I assume they'll try them all. They've got enough money they have bought themselves time to tune. Smart. But it's hard to say if they'll find a breakout approach in three months or three years. It's like saying I'm sure I'll have a cure for baldness in three years... we didn't think there was a real viable solution to that one until suddenly there was. I think it quite likely Facebook won't find a business model that will make them massively profitable google-style, and they'll keep bebopping along with minor profits. Unless, of course, they do. And if they do trip over the right approach, they are poised to maximize it because they have the userbase in place. On Fri, Oct 10, 2008 at 11:55 PM, Jared Spool <[EMAIL PROTECTED]> wrote: > > On Oct 11, 2008, at 12:05 AM, Kontra wrote: > > We don't live in a theocracy where *you* get to judge whether legally >> accrued profits are to your liking or if a buyer of a company is allowed >> to >> see value in it that you can't. >> > > *I* believe *I* do. > > (And Eric's right. You probably meant meritocracy.) > > ________________________________________________________________ > Welcome to the Interaction Design Association (IxDA)! > To post to this list ....... [EMAIL PROTECTED] > Unsubscribe ................ http://www.ixda.org/unsubscribe > List Guidelines ............ http://www.ixda.org/guidelines > List Help .................. http://www.ixda.org/help > ________________________________________________________________ Welcome to the Interaction Design Association (IxDA)! To post to this list ....... [EMAIL PROTECTED] Unsubscribe ................ http://www.ixda.org/unsubscribe List Guidelines ............ http://www.ixda.org/guidelines List Help .................. http://www.ixda.org/help
