Not having a revenue model is the new pink

One thing I don’t understand with news about Web services and start-ups is this: why do people always cry about start-ups and alike not having a revenue model or not currently making big bucks or even profitable business?

Haven’t people learned anything from the past? They wondered this same thing with Google, and look at it now! They are now wondering it with services like Twitter, Spotify and still some people do it even with Facebook.

I believe everyone should finally understand that this is the new way of creating concepts and making business; not starting with a polished and totally finished product which you can immediately sell as such, but starting with creating a large community and after having it [if you are worth it], creating and releasing extra in the service – hopefully with meaningful stuffing – for those who want to pay and use it to the max.

The trick of course is to have an innovative approach and ask “Well, now we have all these people here – what are we going to do with them? How can we do profitable business with all this and still keep people liking us?”

I believe it’s really OK in the start to have a half-ready concept which you can put out for public. That way you can more easily tweak it according to what people are saying about it and what they really need.

Here’s the CNET News’ article about Twitter putting out pro accounts

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4 thoughts on “Not having a revenue model is the new pink

  1. Pingback: Social Media Mycelium « Momentary Lapse of Reasoning

  2. Excellent post Marko! Too many technology driven companies focus on the product, not on the customer or the revenue logic. What good is a great product, if the only interested person is its creator? 😉

    The trick and challange with building online communities and then turning them into payble services is exactly how do people feel – do they feel betrayed and vote with their feet when service is no longer free, or are they willing to pay for the extra value add?

    Why not start directly with a payable service? Or at least have the revenue logic already clearly fixed at the back of your mind when creating the concept.

    People are used to getting things free from the net, but I believe if and when the value prop is good and provides a solution for customers problem – then they are willing to pay from day one on.

    The community can be small in the beginning, but the good news tend to spread fast 🙂

    • Thanks for the comment Heli!

      I agree on the issue that you should have a business model and a revenue model to do realistic business. I’m separating them here to emphasize the fact that some online services seem to have a good business model, but not getting any money [not so good revenue model] from their customers. Of course we can then argue about the meaning of the word ‘business’ and does it always mean something profitable ‘at the moment’. Merriam-Webster says ‘a usually commercial or mercantile activity engaged in as a means of livelihood’ AND ‘serious activity requiring time and effort and usually the avoidance of distractions’. Maybe this is off topic already. 🙂

      Of course starting directly with a payable concept is still as valid as it has used to be. I’ve seen that making once free features payable isn’t often a good idea. My post was more about pointing out that this ‘first create community and then get money’ can be a one way to go if done correctly. And if you have a good plan behind it all to evolve things further and keep your customers happy, even if you add some payable features, the better!

  3. Pingback: Shout + people + fun -> Stirr it up! « Momentary Lapse of Reasoning

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