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Leaving the merits of advertising itself aside for a bit, this post brings up a bigger topic that I think anyone running a startup needs to think about: When y
by nlh 14y ago
Leaving the merits of advertising itself aside for a bit, this post brings up a bigger topic that I think anyone running a startup needs to think about:
When you're getting involved in a startup, it is incredibly important that you be honest with yourselves and your partners about what the goal really is (this is to the point made the other day about self-awareness) and what you're really building.
A Feature: A piece of a piece of a puzzle. "It's like Facebook's News Feed, but instead you get audio updates instead of text updates!". Hackers can be guilty of this often - focused obsession on improving the world (or a piece of it) by tackling even the smallest problems. Not necessarily a bad thing, but not necessarily a guarantee of success.
A Product: Instagram is a product. It's full-featured, it's beloved (or was ;), it's free-standing, it works, and people use it. But do people pay for it? Would they? Would they make money by themselves or only in the context of a bigger company (like Facebook). Twitter is also a product, along these lines.
A Business: 37signals is a business. People pay them to use their products. They are free-standing, they are profitable, and they don't _need_ outside investors (need vs. want is different, btw - sometimes it makes sense to take strategic investment).
There's nothing inherently wrong with any of the above paths, btw. But you need to understand which path you're on, because you'll do a better job of it that way. If you decide to be on the feature/product path and hope to get acquired/acqui-hired, that's fine - it's a legitimate approach (that works, at least for now) and folks have made $billions doing it (see: Instagram & everyone else).
But it's a different path than starting a business. Goals are different, operations are different, and outcome is different.
The point, in the end, is that often the response - "well, I guess we'll sell ads" is what people who are starting features or products often say to convince themselves or others that they're on a worthwhile _business_ endeavor. And that's often dishonest (intentional or not).
Understand the path you're on and I'm willing to bet success will be more likely.
- timjahn 14y ago+1. Love this explanation!
- ggordan 14y agoThanks for the advice, it makes sense. However shouldn't the choice be between a feature and a product as they could develop into a business? You can't just make a business like a product, it takes time. A feature/product evolves into a business since no one can be profitable from launch day.
- giulianob 14y agoWhat would you say is the biggest difference between a product and a business though? Is a business just a company with a lot of successful products? Following your terminology, I'd say people create products and if they are successful turn into businesses. I totally get what you mean by features though and sometimes I wonder if tackling these tiny problems with full out services is a legitimate business strategy or just a fad.
- brudgers 14y agoBusinesses can pivot. Products can't. IIR, 37signals originally built websites (or something like that). They pivoted the company into SaaS around their internal project management solutions.
- orangethirty 14y agoThe product is what you sell. The business is the rest (marketing, sales, etc.). A product itself is not a business, because products don't sell themselves. No matter how good they are, someone needs to market them in any given way. Problem with hackers is that they falsely believe that building a great product is enough. Nope. Ever see the mountain of downright awful products out there? How do people buy such such garbage? Because those products are marketed well. If people sell garbage with good marketing imagine what a great product and great marketing can accomplish. One word: Apple. Billions of dollars due to great marketing and great products.
- giulianob 14y agoHow is Instagram a product and not a business in that aspect?
- orangethirty 14y agoInstagram the social network/app are the product. The business is all the social engineering being done to market it, the infrastructure to handle all those booty shots, the HR dept., etc.
- ChuckMcM 14y agoThis is a good distinction, I find that businesses start with the notion that they will make money so the question is "What can I charge for it?" or "Can I monetize the tool/data/views/Etc?" and a feature starts with "How many people would find this useful?"
- orangethirty 14y agoI find that businesses start with the notion that they will make money... There is a distinction to be made. There are many startups that are the product itself. Their product is just a coy to make it seem as if they are successful. Their only aim is to sell the success to investors/people with money so they can cash out. In this case, the startup/product provides a very different set of usefulness. Yes, these types of businesses are useful. They generate traction for the buyer, their engineering talent put to better use, etc. Though these days I just start with the question: Who will buy this? If I can't answer that then I move on. No sense in trying to mine a business model that does not exist.