This post is crazy obvious to many but I need to write it down anyway.
I received an email from a founder telling me about his startup.
The email starts out saying “the reason google makes so much money is because they capture intent”
Then because they capture your intention they can sell ads that are contextual and relevent.
We’ve heard this countless times and yes it’s true.
But here’s the real reason google makes so much money: their search engine works fast and amazingly well even as the number of web pages and spammers have exploded in recent years.
Everything else is only true because their search product is so excellent.
This rule of building something amazing and at scale is the pre requisite. Otherwise it doesn’t matter how you monetize (ads, virtual goods, subscription, a la carte, etc).
There were so many skeptics about facebook’s ability to monetize. The haters would say : they can’t monetize, it’s all UGC, they don’t capture intent. Blah blah blah. Today FB does over $100M a month in revenue. A month! Now I’m not a big Facebook user. It doesn’t work for me but clearly it works for many.
So before you get locked in on the business model make sure the product just works and blows people away.
(please excuse any typos. Wrote this post on my iPhone)