A Startup Guy

One of the best pieces of advice I ever got before launching a business was, “Be sure you have something to sell.” Makes sense. And yet so many Internet entrepreneurs ignore this simple advice.

I think part of the problem is that our point-of-view has been distorted. We often see things through the lens of successful companies like Google or, worse yet, Twitter. Google made money from search – LOTS of it. Twitter still has no discernable business model. And yet they’re rolling in cash. So lots of startups take the stance that they’ll just launch and figure out a business model later. Or figure they’ll get rich from selling ads like Google.

Here’s the truth of the matter. Once you launch, you’re going to be insanely busy. If you can’t figure out a business model in the calm of business planning, you’re not likely going to have time to figure one out in the midst of startup chaos. You need to have a plan on how you’re going to separate your users from their cash. That plan may (probably will) change somewhat after you launch. But you need something to start with.

Even Google couldn’t survive on search. They had to institute selling ads to make money. They are now, essentially, an ad company that uses search and information organization to draw in attention for those ads.

For many startups, the “punt” answer is to sell advertising. Take it from someone who learned the hard way. There is lots of money in online advertising, and most of it already goes to just a handful of companies. You must have thousands, if not millions, of visitors to even begin to make this business model worthwhile. Google succeeded at this because they were first and got it right. A handful of others have picked up enough of the leftover scraps to make it worth their while. You’re too late! It’s already a mature business that is not growing much any more. If this is your business model, STOP NOW! Revise your model to actually have something to sell.

Invest the time now to create something people want to buy. It will make your crazy startup life a little easier later.

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