There is no shame in monetization

I was talking to one of the founders in our portfolio last night.

We were talking about the decision for a consumer startup to start generating revenue and he said to me “there is no shame in monetization”.

I’ve been a big believer in scale first, monetize second so some folks think that I don’t care about revenue. And that would be false. Revenue is a key part in getting to be self sufficient, increase value and independence. 

The only question is timing and how you do it.

Many folks like to say that Google monetizes so well because they capture intent. That is true but it’s not the ultimate reason. The main reason they make so much money is because their search product is excellent. Plain and simple. In fact, the ads on Google Search are part of the search experience and their ads make their product better not worse. Imagine if ads were removed from google search. The product wouldn’t be as compelling. 

That’s the holy grail in my mind. Do your revenue products make your user experience better or is just duct taped ads inserted in some white space. I’ve seen successful companies do the latter but it’s harder and more valuable to do the former. 

That’s the challenge consumer startups should embrace and figure out. And I think it’s easier to figure that out once you are on the scaling path.