Why most web start-ups don’t fly
Running a business isn’t too difficult if you respect some basic rules. Rule number one: you have to offer potential customers something they need. If you do the math well, exploit your network, practice some good marketing and have a bit of luck, you will probably succeed.
Nevertheless, 99% of all web start-ups die before they fly. That figure is higher than in any other industry. Why is that? Because most web start-ups don’t offer something customers actually need. Many people in the web 2.0 scene seem to disregard this.
I can see why. It’s relatively cheap to build web sites and with a potential worldwide market the prospects are extremely positive. Entrepreneurs, investors and enthusiasts - they all get carried away by the figures.
But if you don’t manage to tap into that worldwide market, it’s a whole different game. It’s not just bad for investors; it might blow up the industry once more (remember bubble 1.0?).
That’s why I believe we all need to be a bit more critical. Virtual communities might be the future of the web, but this doesn’t mean that any community will stand a chance, let alone be profitable. In the end, thinking of a good business model first is cheaper than just building web sites. It will pay off in the long run.
Reinier http://zwitserloot.com
June 26th, 2007A bit more critical commentary from people ‘in the know’ is certainly warranted. I think what’s happening here is that the ‘outside world’ - the not so internet savvy, often misunderstand the market. It IS a strange market. No other market I know of can be sold for millions with no viable monetization strategy built in. No other market I know has a flagship company with twice the stock valuation that is considered ‘healthy’ (I am not up on the investors jargon, but take the total income of a company, divide it by the number of outstanding stock, and a number in some unit around 15 is normal. Google is more like 30).
Hence, web2.0 shops often get disparaging comments from e.g. parents and other non-web savvy people.
However, that’s a problem because critical commentary from people ‘in the know’ is what you really need. I love negative feedback. Gives me something to do.
Cristiano Betta http://ibbydibby.com/
June 27th, 2007I actually agree with Martijn, as I am now at the Essential Web conference, and although some of the techniques and problems they solve are very advanced, I seriously doubt if normal users will USE this in the first place.
alper http://www.alper.nl
June 27th, 2007Not offering people something they need is bad enough, it’s really bad not to realize this until this is too late.
This reminds me of Reinier’s riff on how you owe it to yourself and your friends to be as critical. Be as hard as you can for your own ideas and your friends’ to save you both from wasting lots and lots of time.
This is a quality I see is missing from the scene right now. A lot of people stay on the surface with a flat ‘cool’ instead of going in depth and offering criticism for fear of spoiling potential contacts and being seen as a naysayer.
The lack of self-criticism is -I think- symptomatic by the rigidity of thinking of a lot of people. Lots and lots of people I speak are up on their own island and they cannot be bothered to entertain different things.
Criticising your own ideas mean that they can (and probably will) be subject to change. Most people are not ready to change their own world and they would do anything in their power to prevent it.