This link has been bookmarked by 27 people . It was first bookmarked on 19 May 2008, by Jon Aston.
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28 Oct 08
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Visions of sugar-plums and multi-million dollar deals immediately started dancing in my head. As he talked, the rolodex in my mind quickly flipped from person to person. I thought of potential customers, potential partners and even maybe people appropriate to join his team. His product was good, and not that he asked me to, but I couldn't help forming a deal network in my head.
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The old guy on the other hand never went this route. He merely looked at it a moment, then immediately started taking off the neighboring easy-to-remove piece of the engine. Once that was off, he then effortlessly put his screwdriver in to remove the now exposed screw. Now mind you, the old-guy's way was my back-up plan - but I was betting that my brash exuberance would payoff in a slightly quicker result. Sometimes it did - sometimes it didn't - and sometimes I broke screwdrivers.
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I should have structured the deal as a contracting agreement. Charging on a per-hour basis to develop their product using what we already had as a base. Then, give them a discount rate on the hourly rate in exchange for full-rights to further develop and sell the product as our own. This would have been a 6-figure deal which would have meant a lot at that time. What's worse is you might be thinking that I missed an opportunity to fleece a customer - but I argue you're wrong. In fact, that arrangement would have actually brought more value to the Adobe.
In the old-guy's arrangement, Adobe would have then had a hand in guiding the project and making sure all the features they wanted were in the soup. Not to mention, if I didn't build this for them, they simply would have had to hire someone else to do it - probably spending lots more. -
Visions of sugar-plums and multi-million dollar deals immediately started dancing in my head. As he talked, the rolodex in my mind quickly flipped from person to person. I thought of potential customers, potential partners and even maybe people appropriate to join his team. His product was good, and not that he asked me to, but I couldn't help forming a deal network in my head. -
He was basically building a (good) product, then laying it out on the web for all to see and hoping to get a million eyeballs. The viewpoint of the business is to get eyeballs, often from things like Digg or Techcrunch, and then figure out how to keep them. And then amazingly often, this really is the step where entrepreneurs have no clue what happens except they are sure the next step is "and then Profit!".
This is an extremely innocent look at business - and in some sense, its the most logical one if you simply have no other avenues. -
This model isn't wrong but now to me (who has of course only recently come to rather shocking self-realization that I am... an "old-man" at how I view business) it seems like a business model without considering connections. Deciding to make connections for your business of course isn't conscious. When something happens, the first thing that pops in your head is "Boy, Fred needs to hear about this". And depending on how many Freds you know dictates how often that idea pops in your head. (and of course, the more Freds you know, the more Freds you will know).
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It wasn't so long ago that saying your new startup was monetized by ads wasn't scary. Some companies go right from eyeballs to ads and to sell-out. Thats great work if you can get it. But the number of eyeballs is limited. Its scary to think that, but on the web, we tend to give value away and "make it up on volume". The only problem is you need a hell of a lot of volume to make up for free. And 6 billion people isn't all that many when it comes down to it.
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I have plenty of opinions about business models, but to me, the best business model is one that makes your customer money. I didn't say "saves" them money - big difference. Also, its better yet if that customer is a business. You need less businesses as customers to be successful than if you had individuals as customers. A common sweet-spot is BtoBtoC. Supply to businesses that supply to consumers (and of course, make them money).
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Your real business model might be hiding like that last screw holding on part of the engine. Despite you stubbornly breaking screwdrivers, you might not get to what you need. It might just be worth asking yourself, "WWTOMD" - What would the old man do?
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Good Post, I am a soon to be 30 year old who has been self employed for most of his 20's. I have been a partner in businesses with multi million dollar potential and seen them fail because the "Old Men" I was involved with had completely misunderstood how to run a successful technology company. I think that there is this allure of the web and of technology and some experienced businessmen fail to see technology projects as something that needs more than a virtual presence to become a successful venture. I have found that traditional businessmen frequently have either a complete misunderstanding of how to profit though technology or they have an "If you build it they will come" attitude where they think you flip the switch on your web app and all of a sudden you have customers. With that said, I will admit that I am starting to also feel like the old man myself. I learned a lot of hard lessons early in business and I'm now finally starting to see them pay off.
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After two years I've seen a couple sucessful ventures. However, most of the time things simply don't work out. It is either a people thing, money thing, or we build it and --Surprise-- people don't come. In all this time my sticking to my guns and getting paid for my work at the time has always worked for me.
Maybe someday when I hear and idea not based off of "The Young Man's Business Model" I will jump in and work for the big payoff at the end. However, nobody I encounter thinks about how they will make money off the Internet wihtout trying to attract as many eyeballs as they can and hope that somehow they will make a profit. As if, as you suggest, things will somehow take care of themselves at that point. -
At one extreme I had one company who we contracted with. This was great when their business was booming but it hurt us when they slowed down.
At the other extreme I had all end consumers which meant higher margins but also a lot of expense and running around to manage all the accounts.
Of course the best situation is to have a blend.
Some large companies to cover your overhead with their lower margins and slower pay cycles.
Some smaller companies where you get a bit more profit and a bit quicker pay.
And end customers.
Visualize it as pouring rocks in a container; big rocks and then smaller rocks to fill in the gaps and then gravel to fill in the smaller gaps. -
Page and Brin had or still have this in mind in a sense that the only important point is to create a great product and everything else will come, not sure if this is true in the Enterprise space.
Old man cases are very very common and the Google ones (and how much they are resisting) are new and breakthrough. -
The young man model is totally why my startup company is out of money and looking to sell. We focused on developing a cool product and showing it to the college kids, while our competitors focused on recruiting musicians, who in turn publicized and made money for both themselves and the competition. We never worried about marketing, just thinking, it'll explode once we give it to a few thousand people. Now we have over 10K users and a meager income each month, but no tipping point has yet occurred. We haven't tapped into the market of money making customers and now it's too late for us to invest more into doing so.
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26 May 08
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I asked about his sales infrastructure. His answer left me wanting but I figured he was probably still fleshing it out (a very hard task). I almost rhetorically asked about the sales cycle. There wasn't one. Now I was getting confused.
As we talked more it became clear that he and his company were following what I'd call the young-man's business model.
He was basically building a (good) product, then laying it out on the web for all to see and hoping to get a million eyeballs. The viewpoint of the business is to get eyeballs, often from things like Digg or Techcrunch, and then figure out how to keep them. And then amazingly often, this really is the step where entrepreneurs have no clue what happens except they are sure the next step is "and then Profit!".
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16 Apr 08
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15 Apr 08
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fbrubacherYour real business model might be hiding like that last screw holding on part of the engine. Despite you stubbornly breaking screwdrivers, you might not get to what you need. It
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14 Apr 08
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David DugayThere's a young man's, gung-ho way of thinking briefly then jumping to action. There's also an "old man's" way of thinking things through and applying a bit of wisdom that only maturity and experience can teach you before jumping to action. Choosing you
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