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Are there any success stories of companies that turned on the "profit switch" and started to make money? I'm just very skeptical about this. It looks like many

by igorgue 15y ago

Are there any success stories of companies that turned on the "profit switch" and started to make money? I'm just very skeptical about this. It looks like many companies are looking for the big acquisition and there's no plan "B". Also this article makes the assumption that companies today are actually making some revenue, but, most of them (at least the ones that get press) are not!

alain94040 15y ago
Google and Facebook for a start. If you build something people want and use, in the scale of national TV audience, then you will be able to monetize. If you have a great product for a niche, then double-check your unit economics before you start.
- jonnathanson 15y ago
  It needs to be said that Google and Facebook are perfect, no-brainer advertising platforms. Mass audiences + natural use behaviors that can be monetized via ads + user analytics and segmentation capabilities = beaucoup advertiser bucks. But it's a mistake to look at a typical startup and assume there's some sort of magical "monetization switch" that can be flipped when sufficient scale is achieved. If your platform isn't a natural fit for advertising, or for other forms of monetization, then monetizing is anything but easy. Scale isn't sufficient. It's necessary in a lot of cases, but in and of itself, it doesn't guarantee anything.
  - zackattack 15y ago
    I'm having a hard time coming up with a case where a platform /product achieved scale (in the age of modern advertising), yet couldn't monetize. Which ones can you think of?
    - webwright 15y ago
      Foxmarks/Xmarks and Delicious come to mind.
  - webwright 15y ago
    "It needs to be said that Google and Facebook are perfect, no-brainer advertising platforms." Hindsight! When Google came to being, search engines were not so obvious. They relied on banner ads (declining CPMs). Overture was experimenting with the PPC model, but it wasn't remotely mainstream. Facebook as well. Many people claimed that Facebook could never turn a profit with advertising. Users had no purchasing intent, suffered from ad blindness, etc. To some degree, they were right-- clickthru rates on FB are pretty awful-- but with 700M+ active users, it really doesn't matter. It was decidedly non-obvious that Facebook would be a gaming platform.
pbreit 15y ago
I'm not sure I understand the question. Pretty much every successful internet company began with zero or limited revenues and huge losses (Amazon, Ebay, Google, PayPal, Facebook, Yahoo, etc).
horatiumocian 15y ago
Probably the best example is Amazon. They were unprofitable for the first 6 years or so, using VC money (and money from the IPO) to increase their market share as quickly as possible. Groupon might be another example soon, if they don't get bankrupt, of course.

by igorgue 15y ago

alain94040 15y ago

Google and Facebook for a start. If you build something people want and use, in the scale of national TV audience, then you will be able to monetize. If you have a great product for a niche, then double-check your unit economics before you start.

jonnathanson 15y ago
It needs to be said that Google and Facebook are perfect, no-brainer advertising platforms. Mass audiences + natural use behaviors that can be monetized via ads + user analytics and segmentation capabilities = beaucoup advertiser bucks. But it's a mistake to look at a typical startup and assume there's some sort of magical "monetization switch" that can be flipped when sufficient scale is achieved. If your platform isn't a natural fit for advertising, or for other forms of monetization, then monetizing is anything but easy. Scale isn't sufficient. It's necessary in a lot of cases, but in and of itself, it doesn't guarantee anything.
- zackattack 15y ago
  I'm having a hard time coming up with a case where a platform /product achieved scale (in the age of modern advertising), yet couldn't monetize. Which ones can you think of?
  - webwright 15y ago
    Foxmarks/Xmarks and Delicious come to mind.
- webwright 15y ago
  "It needs to be said that Google and Facebook are perfect, no-brainer advertising platforms." Hindsight! When Google came to being, search engines were not so obvious. They relied on banner ads (declining CPMs). Overture was experimenting with the PPC model, but it wasn't remotely mainstream. Facebook as well. Many people claimed that Facebook could never turn a profit with advertising. Users had no purchasing intent, suffered from ad blindness, etc. To some degree, they were right-- clickthru rates on FB are pretty awful-- but with 700M+ active users, it really doesn't matter. It was decidedly non-obvious that Facebook would be a gaming platform.

pbreit 15y ago

I'm not sure I understand the question. Pretty much every successful internet company began with zero or limited revenues and huge losses (Amazon, Ebay, Google, PayPal, Facebook, Yahoo, etc).

horatiumocian 15y ago

Probably the best example is Amazon. They were unprofitable for the first 6 years or so, using VC money (and money from the IPO) to increase their market share as quickly as possible. Groupon might be another example soon, if they don't get bankrupt, of course.