I’ll start with a broad, sweeping generalization about consumer internet:
1. The user never pays. I would consider it to be not only true to a very large majority of consumer internet ventures, but actually a defining characteristic of consumer internet.
2. Since the user doesn’t pay, and the business exists to make money, there should be another set of entities who actually pay the venture. They might be advertisers, marketers or sellers selling goods to the users. From the perspective of the venture, lets call them customers.
So from what we see, a consumer internet venture deals with two sets of entities, namely Users and Customers. These two sets of entities have completely different reasons behind engaging with the venture,. Also, the venture needs to have completely different strategies for engaging, attracting, and dealing with these two sets of entities.
Here are some observations:
1. In most cases, customers would follow users. Meaning, a website must have users for someone to come and try to sell something there.
2. A start-up works with severe bandwidth constraints. It is impossible to deal with both users and customers initially.
3. Too much focus on customers, and hence, on selling and marketing on the website in its initial days almost always drives away users.
Keeping these in mind, I think it is very important for a consumer internet start-up to focus primarily on users in the initial days. Without dedicated, loyal users, the venture makes no sense.
What do you think about this?
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What I mean to say is that we would not have been seeing some of the biggest successes on the internet if their creators were focussed on customers from day one and not on users. I can immediately cite google, Facebook, MySpace, 43 things, wikipedia (though not really a commercial success, but can easily be one if they have the orientation).. and many others.
I think most of us think only about “broker-type” businesses when it comes to the internet because that allows us to charge the user. But then, that badly limits what is possible on the internet. If we want a google or a yahoo answers or youtube to come out of India, we’ll have to break out of the mould.
Neeraj if I am not wrong what yous said is the only working model exit in internet bussiness.Althrough you may find traces of many other model bet everyone doing business here know that intternet is all about scale (user (90%)+ customers(?%).
Real question is how long this model wil work profitably and what is the nest big thing about internet.I have serious doubt about sustainbility of this model.Internet now is media business and how much media business can scale?
A successful venture in the Internet domain is all about building communities. Offer a great service, build up a community, and then monetize it. There are a hazaaar ways of monetizing a community- rest assured VCs and sales managers will think of ways of making money from a vibrant community. And yes, ads are NOT the only way of monetizing an internet community.
Lets look at these examples- WordPress and Meebo. Now, they do NOT have any revenue model at this moment. Or perhaps, they have it secret. However, as a user I do not get annoying ads in either meebo or in wordpress, and these two concepts have huge user base. Unlike other open source projects, these are for profit ventures and have got cheques from VCs.
I agree with the premise that the Internet is moving to “Free”dom
I also agree that the focus needs to be on servicing the users and not the advertisers..
I cant help thinking after reading the google story that two of the smartest people in Silicon Valley John Doer and the guy from Mike Moritz put in 25 million on a business model of Google that was based on syndication of search engine to other websites..
they were right and wrong..they were right because they bet on two entrepreneurs who were focused on building something really cool and focused on customers..
they were wrong on the business model..at the end it didnt matter..so if they had followed the money trail..would never have worked..but they followed the product and passion trail and made it
imperative to focus on users not the customers as you have said..in my opinion.
i think internet medium will have lot of opportunities for the consumer paid model.New startups could consider the consumer paid servise area and brokerage based business.
Please dont follow the travel ,matrimonial,job search and real estate. Because the market share should be low level for new entries and new startups should not sustain in that arar with out large capital.
so smell the new one with consumer paid maodel.