Russell's Unproven Yet Seemingly Obvious Number One Rule For Web Based Services: Don't launch without a way of making money.
Source: Where's the Biz?

This dovetails in nicely with my thinking about hosting, and with FeedReactor. I look at nifty services like, BlogLines, and Flickr, and think, “Hey, I have some good ideas, too. I could possibly put together something like this. But how the !@#$% do those guys pay their hosting bills? Let alone make a living?”

I know the answer to this in some cases is that the costs are paid out-of-pocket, and the people behind the sites have day jobs that pay well enough. And sometimes the goodwill and respect earned by such endeavors pays off indirectly. In other cases, I've heard that some venture capital is involved. So that at least informs me as to where short-term means of support come from.

In any case, when I know that I haven't paid a dime for my usage of any of these services-- and I imagine that anything I might do would be targeted toward someone like me (though that's probably part of my problem)-- I have no clue what kind of business model they're following.

What, advertising? I know I personally provide a dismal click-through rate, unless the ads are tuned just so and with the right shiny bits. But then, I consider that if I were to plaster credit card logos and PayPal buttons right up front, I'd turn away users in droves. (Then again, I do appear to shell out at least $50 per month in internet services beyond my bandwidth bill.)

But, see, I haven't a clue about business. I just like to cultivate nifty ideas, and I keep thinking that at least one of them could be the right thing at the right time and in the right place to work out for me. And I have to assume that the people who have done something, and keep doing something, where I haven't done anything know something I don't.

Then again, I thought I'd figured out what was going on during the dot-com boom, and I assumed all those people projectile vomiting money everywhere knew what they were doing too. (Even though they all seemed insane.)

So all I'm left with is that I think I have the occasional good idea, but with no way of know how to run with it. And all these internet entrepreneurs apparently bootstrapping out into open space don't make sense to me either.

Anyway... It all seems like magic to me. Maybe one day I'll figure it out.

Archived Comments

  • I generally find that I just hack projects without thinking it through, so it could just be a lack of forethought. ;) mind you, I haven't put up a Flickr, a, or similar -- but IIRC the HotOrNot guys had pretty much that style at the start, and had to retrofit a way to get paid on, afterwards.
  • "But, see, I haven’t a clue about business. I just like to cultivate nifty ideas..." Hitting the nail on the head with that bit - my problem exactly! How does a mad [computer] scientist with no business sense get around? We need partners perhaps?
  • The odds are that FeedReactor won't be a viable business... ...unless is specifically solves a difficult (hard) problem that existing services (Bloglines, etc) don't and won't soon. Still, very cool work.
  • Carter: Good thing I've still got a day job, then! And, thanks for the compliment on the work. Very true about the hard problem, though. I do tend to think, whether correctly or not, that some of the things I want to do with FeedReactor will be solutions to some interesting problems.. but that depends upon a) whether I'm not just full of it, and b) whether I'll have the time to take it where it needs to go. (Strangely enough, I love discovering when I'm full of it.)
  • It doesn't help you figure out a concrete business model, but one piece of the puzzle is its gotten a *lot* cheaper lately to build a web start up. The hardware is cheaper, the software is cheaper, the bandwidth is cheaper, and the tools are better. But even more important we saw some of the largest banks in the world pour a not inconsiderable portion of their wealth for a few years into creating an educated class of both developers and users. Having participated in several dotcoms I can look back and point to the VCs for creating a huge number of the challenges we faced. But they also gave me a hell of a financial aid package for the best possible education in web development a person could hope for.
  • Casrter sez: "The odds are that FeedReactor won’t be a viable business…" Ah, but what if FeedReactor were available to the Enterprise, internally managed, in a private and secure way? Any value there? I mean, I still can't believe companies allow employees to use AIM instead of just throwing a Jabber server in place. (Oh, wait til Tiger for that one...) Anyway, there probably is a business model, I just can't see it, but then I'm just anothr hacker with little business sense.... sigh...
  • I don't think it's that complicated. You have a business when you make something that someone else wants. Bloglines makes something that lots of people want -- there's probably some way to make money from it, whether it's through advertising or selling some add-on service. Feed processors aren't for ordinary people, they are something that services like Bloglines want, or corporate IT groups want. There are two ways to make money in this second category. 1) Get a business partner, and develop something that can be sold to software and services companies. 2) Develop a superb open source toolkit, and make money from customizing it. The fact that feed processors will eventually be a part of Bloglines etc. is a plus, because organizations make build-buy decisions. If there's a component that's good, the bigger company may buy, license, or hire.