Max Levchin's favorite new startups
businessinsider.com
businessinsider.com
And what the people want is free - torrents, muxtape, tvlinks, etc.
I'm not saying it's wrong to charge money, but not charging money has been a successful strategy for a good number of startups.
By the way Youtube, Facebook and Skype are not profitable yet (at least not to my knowledge so excuses it if I am wrong).
Let me give you a good example of "Pricing".
Take a company such as ClickCare. They provide a web based environment for home care providers to remotely ask questions to doctors, and share photos & videos of patients. The doctors can review the information from anywhere and make the proper suggestions. That is what they do, well they are also HIPPA compliant to ensure the privacy/security of the patient information. Now this video, photo, wiki company charges doctors 20,000 USD a year.
I am not saying that is all to their enterprise, but whatever effort two guys in a garage are going through to build the next Flickr, they could apply their technology in less sexy field and have a significantly higher chance at being successful.
But not everyone wants to build a profitable, not famous business. They want to be rockstars.
That's because these companies are so successful they've killed off all their competitors.
Yet some companies surge every now and then to offer premium video conferencing services, or offer custom search services to companies with millions of documents across their network and they charge a nice fee for it.
You have companies such as Webex dominating web conference, yet you have startups such as MeetCast with a promising technology (although I have only seen a short screencast once) and I am confident they can make a good amount of money from this technology.
If you define "success" to mean "lots of traffic" and not "profitable and growing". Clearly this is the case, because half of the companies you listed aren't profitable.
There are -lots- of internet companies who charge and are very successful. I'm not talking 37 Signals and Fog Creek - literally drops in the bucket. I'm talking about Amazon, Salesforce, and Google AdWords. Oh and how does Craigslist make money? Charging users.
> not charging money has been a successful strategy for a good number of startups.
No offense, but you're blowing both the "successful" and "good number" part of this way out of proportion.
There's millions to be made from advertising revenue. If you can get people to pay for something, great, but not every product is the type where paying would make any sense at all. By charging consumers directly, you massively reduce your audience to a small subset of users.
It's quite funny to see people imply that advertising revenue isn't "real" revenue, or is in some way less valuable than getting customers to pay directly.
You know what the most powerful marketing word in the world is? "FREE". The clever thing is using that to your advantage and still making money. Tons of industries do that though, loss leaders work, 'free cellphone (with contract) works' etc etc.
As long as numbers like these hold true: "At the $1 RPM (CPM/CPA/CPC) level achieved by most general sites, you need 4 billion page views/month ... to [reach] $50M in revenue per year" (http://www.thealarmclock.com/mt/archives/2007/03/a_vcs_view_...), charging money for a product that creates value is going to be a more viable way of starting a successful company online
If a company like firefox implemented ad blocking by default, they'd be doing the web a huge favor. Unlike pop-up blocking, firefox would be killing the only revenue sources for the majority of today's popular websites. Sure, it's easy to say that more companies should focus on getting 'real' business models, but a web in which _every_ professional web site required a subscription fee would be totally impractical.
It will be very cool, however, to see how the micropayments industry challenges advertising. While it's unlikely CNN will every jump on it, what if some of the more adventurous sites ditched advertising in favor of a donation box model?
The thing is, people thought ad-skipping technology was unlikely until tivo came out and made it usable. I don't imagine it will be too long before someone comes out and does this, and if they execute well, it would be devastating to the industry.
AdBlock blocks some adverts. It's useless blocking a large amount of adverts.
If it comes installed, adverts will all just change and it'll be rendered useless.
You can't draw parallels with TiVo. Video adverts prevent you getting to see the content you want. You have to wait. Internet advertising does not do this. It's just additional information.
Edit: This could be thought of like an analogy to spyware detectors, i.e. ad-aware. They have a ton of custom detectors, which are continually updated to classify spyware. I would certainly pay for a commercial free web.
I'd rather not have an arms race, but if there is one, it's pretty obvious who would win.
And, combined with a better managed, ugc version of http://adblockplus.org/en/subscriptions would certainly be unstoppable.
How do you block those ads? How do you know it's an ad and not just a link.
The difference between a link and ad can be nothing to observers. (obviously intrusive ads are another matter)
You could also scan all outbound links and check to see if content (actual content) is the same without the parameters (e.g. my.affiliate.com/?affid=134 == my.affiliate.com or aff123.affiliate.com == www.affiliate.com) simply based on a few heuristics.
I am thinking something like a combination of opendns + adblock + digg would work in a nice slick package so that grandmas can use it.
Make something people want. People don't really care if someone gets commission. In fact they often go out of their way to make the website commission if they like what the website does.
I do think it's something people want too. Distraction is a huge problem on the web. I know it's not what you want being an ad supported business, but I do believe someone will do it at some point.
Lets say you create some webapp that you charge $20/mo for. To get to $50M a year, you need to get 200,000 paying customers.
The question then is what is harder to achieve, 200k paying customers, or 4bn page views/month.
-$20/mo.
Personally though in my experience of consumer based websites, making money from advertising is 'easy'. Orders of magnitude easier than getting someone to reach for their wallet.
Getting big and targeted is a lot more expensive (and highly competitive, see gadgets, etc.) than getting big and general, since it usually means non-user generated content.
That being said, for every (EDIT:ok, most) struggling consumer startup you show me, I can show you a way they can apply their technology in different fields and charge customers.
We just have to stop being afraid to say "Pay Me Please".
ISPs should have micropayment systems that add charges to your bill - just like when you SMS a shortcode, it gets added to your cellphone bill.
This would massively change things on the web.
At the moment though, the hurdle is just way too high for consumers. The effort required to get someone to pay you $10 isn't even in the same ballpark as the effort required to make $10 from advertising.
Just because you sell the company (YouTube) doesn't mean the business was successful. It just means you've handed the loss to another company.
Sure, it's great to make a better database examiner, but if you're young and you have nothing to lose, why not try something really fresh. Something brand new? That webcam figure is fresh, for example.
These were all truly innovative ideas, and they made enough money to give Silicon Valley it's name.
The problem with truly innovative ideas is not that they are impossible to make money with. The problem is that it's a homerun business where a few succeed and most fail. VC's have known this for ages, which is why they invest in innovation.
But the people who do stuff in media, for example music or tv, always have potential to change the industry. Same with anything communication related. These are core industries that are fundamental to human beings - so startups in those areas always have huge potential. Like muxtape for example, or justin.tv, those startups can change the world. They are not changing the world yet, but I can see that with the right things in place, they can change the world. It's the same with microprocessors, anyone who was in the field knew that if size went down, price went down and so on, microprocessors would make a huge difference. They did not predict the apps that would be enabled because of them.
Why did they not? Microprocessors created a platform, and a platform opens a brand new field for new people to create ideas within. When a startup works on something that creates a new type of platform, then breakout ideas can happen on the platform. Hubcaps are not a platform that others can build on. They're the end of a line.
--Hubcap based games: Who can log the least number of hours? (if it spins,we can measure distance traveled)
--Hubcap based communications: My cars recognize and exchange information (shopping lists, to-do lists, language courses)
--Hubcap based entertainment: Quickly transfer songs/files/etc. -- hooks into your audio system.
--Hubcap based computing: Use those idle cycles while your sitting at the light to help with gene folding.
--Hubcap based energy: Spinners? Naw, they just charge my car's battery (self-powered units).
Braindumps are fun!
Another friend sharing widget video thingy? Bleh.
It's absolutely inspiring.
I'm unimpressed with Max's shallow evaluation.
Check out the DEMOfall 08 presentation for a brief 5 minute overview, or their in-house "Tell The World" interview for a lengthier discussion:
http://www.telnic.org/media-resources.html
The best blog writeup I found is here:
http://www.disruptivetelephony.com/2008/12/is-the-new-tel-do...
If you want to get into a discussion then let me know and I'll pitch some thoughts at you, but wanted to introduce you to the subject first, in case you hadn't already looked into it.
The Japanese sexual culture is deeply disturbing is what I'm trying to say here.
In America, anything beyond missionary position is considered weird. Anal sex is a little edgy. BDSM and roleplaying are considered weird and freaky by pretty much everybody. Which is odd, because sex really should be one of the most individual, unique things for people. Each person has different standards for what they find hot. Why shouldn't that play out during sex?
Those fantasies go far and wide. I'm sure every single person reading this has had bizarre sexual thoughts and ideas. Perhaps not for long, perhaps you've denied the thoughts to yourself as wrong, but the thoughts have crossed your mind. So the concept of a robot like this is, why not let people indulge in these fantasies? Some things you cannot achieve unless you do it virtually. That means either you suppress those fantasies, which is unhealthy, or you find some other outlet - virtual, which is fine, or real, which is certainly not.
My opinion is that having a sexual fantasy about beating and molesting a child is perfectly natural. That's not my personal perverted fantasy, but if it's somebody else's I'm not going to call that strange. So if they've found a way to have that fantasy that doesn't involve harming a child, then props to them! If America had such an open nature to sex, we'd have fewer cultural problems than we do (and we have a lot).
Really? I guess living in or near large cities all these years has warped my perspective of what "in America" means. None of these things seems particularly weird or taboo amongst my social set.
If America had such an open nature to sex, we'd have fewer cultural problems than we do (and we have a lot).
And Japan doesn't have problems? I think you're giving the culture a huge pass. If you wanted to hold up the Netherlands as an example of a very healthy and very open sexual culture (including a societal understanding that teenagers have an interest in sex, and will have sex), then I'd be on board with you. But, we're talking about Japan here...The land of "Christmas cake", "kawaii", etc. Infantilization of women is the norm. That's not healthy or merely open...that's just broken in a different direction than America's protestant zeal.
I wasn't trying to suggest that America has a healthy approach to sex. We, on the whole, don't, particularly with regard to teenagers and sex (some of our child protection laws are bizarre and have horrific consequences, like labeling a 17 year old that has sex with a consenting 15 year old as a sexual predator and a child abuser). But I said nothing about America in my comments. This wasn't a "Go USA! Japan sucks!" conversation, and I don't think there's really anything interesting about such a conversation.
Again, I'm not suggesting it should be illegal...just that I'm rather stunned that the market for a "molest a child" game is large enough such that that is how they market this product. It is, to me, a disturbing indicator of the way a reasonably large segment of Japanese men feel about women (large enough to be the market they've chosen to target with this really clever new toy).
Phrased like that, it seems more bizarre than it did when I first thought about it.
Really? I guess living in or near large cities all these years has warped my perspective of what "in America" means. None of these things seems particularly weird or taboo amongst my social set.
Possibly this is just youth speaking. Those things are absolutely viewed as freak attitudes in college.
i say this is a predictor of success. if you search someone's full name, count how many times you see their shirt with their company logo. until i have enough money as max to throw around, i'll pose with a 8.5x11 sheet of paper with my logo written or printed on it.