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The affiliate space is so tough. Be proud you managed to raise at all with that model. When I tried once upon a time, investors looked at me like I was nuts.
by nostromo 14y ago
The affiliate space is so tough. Be proud you managed to raise at all with that model. When I tried once upon a time, investors looked at me like I was nuts. (And I was.)
And it's not hard to see why. You need to sell about $2mm worth of stuff on Amazon to pay for a single engineer (estimating with a 5% payout). It gets even worse when you add in all the complicating factors that surround sending someone off your property to convert. And in your case I believe you were sharing a portion back with the customer, so it's even a smaller slice of a small slice.
I think affiliate models are perfect for part-time bloggers and the like, but to build a big venture-backed business on the model is an incredible challenge.
- hayksaakian 14y agoGiven this basic math, it amazes me that these ideas still get funded.
- umphetico 14y agoThere's never a shortage of stupid things and the stupid people willing to throw money at some rosy prospects. ie. Facebook.
- marcamillion 14y agoEverything is always "stupid" until it's not. Another search engine? Pffft.....dumbest. idea. ever. Another ad network based on keywords...pssshhh....that'll never get anywhere. A file storage service to allow you to share files between computers? Ugghh...been there...done that. You can see where I am going.
- mfringel 14y agoI'm sure you know where you're going, but I'd like you to continue. Entering a crowded space with no perceivable differentiators means one of two things: 1. You intend to grind it out on volume and compete on price. 2. You intend to differentiate yourself in a meaningful way that the vast majority of the world does not understand yet. I put forward that option 1 is much more likely than option 2.
- marcamillion 14y agoYou may be right....1 is much more likely than option 2, however in the high-growth startup space, most people tend to try and go for #2. That's where the returns are. That's where they are usually most misunderstood initially, and that's where they tend to make the biggest impact on the world.
- umphetico 14y agoEverything you've described is pretty stupid. I hope nobody is working on the next Google killer or yeah another Facebook alternative. All the big names were purely by accident and luck. Tell this to the graveyard of all the smart ideas that never took off because the market didn't need them.
- marcamillion 14y agoHow naive is this reply. An idea can be smart all day, if the market doesn't need it - it's just an idea. It will never be a successful product. It's that simple. Turns out, the hard thing...is not coming up with "ideas"...it is building successful products.
- robryan 14y agoI think 'affiliate is great for bloggers' is a bit of a myth as well. I see it work for pro bloggers that have massive traffic and the time to invest in it. For small bloggers though, there is either a lot of overhead in managing affiliate network accounts and using the right offers or you trade that for smaller commissions with a service that abstracts that from you. I would love to be pointed to some counter examples of small bloggers for who the affiliate model is working well. For my previous (mostly dead now) startup Affclicks (an analytics tool for affiliate marketers) we considered those type of bloggers as possible niche to target but didn't actually find a lot of them. (granted we didn't push hard on the marketing side)