Comments on: And then there were 8 business selection criteria!

By: Helen

Helen — Sun, 02 Jul 2006 06:33:46 +0000

Thank you Sumon..

By: Robert Tsai

Robert Tsai — Sat, 01 Jul 2006 12:53:23 +0000

Fabrice,

I definitely agree with you on this point. And, I would definitely add YouTube to your list of services you identified (Google, MySpace, Facebook) as lacking an initial business model but generating so much user traction because of its mass market appeal that it is easy to see that a revenue model could be applied later.

NBC recently signed a deal with YouTube to show certain content on its site (and to allow its users to spread the content virally through widgets on MySpace and Facebook). You’ve even seen how NBC is partnering with YouTube to leverage their fan base – by soliciting viewers of The Office to submit their own promotions of the show in a competition on YouTube.

I’ve blogged about YouTube and MySpace in a couple of entries:

http://zenrob.typepad.com/zenrob/2006/05/the_widgets_on_.html

http://zenrob.typepad.com/zenrob/2006/06/the_new_new_vir.html

I’m definitely looking forward to seeing what will be the next home run to be hit in this space.

By: David

David — Wed, 28 Jun 2006 18:51:52 +0000

I would add to #4 that even on a competitive market, a new comer can always outshine a leader if they find a way to do the job better -> e.g. Skype vs. Netmeeting, Google vs. Yahoo hmmmm…or Zingy vs. Moviso? :-)

By: Fabrice Grinda

Fabrice Grinda — Tue, 27 Jun 2006 19:11:05 +0000

Sumon,

There is an interesting window right now where valuations are frothy so I would recommend raising as much money as possible right now.

You are also correct, understanding your business model will yield a much higher valuation.

By: Sumon

Sumon — Tue, 27 Jun 2006 16:12:11 +0000

Helen,

With an idea with low capital needs (sub 50k) but with good “ramp up” surely finding the right angel investment won’t be so hard if the return is good enough.

My question would be is this the amount to get you to proitability or merely to get to market? If the latter then increase the amount you are looking for and raise all at once. If the former use Debt instead, its cheaper although with the right angels its about added value.

Fabrice, do you think that there is a Window of about 6 months to build something that doesn’t have a business model, just because Valuations are good now? My view is that by incorporating a business model (or thinking of more revenue generators in addition to ads) valuations will be a lot better if you fall outside this funding window, which is likely to happen if you are building product now.

By: Helen

Helen — Tue, 27 Jun 2006 05:34:14 +0000

I will. Thank you.

By: Wille

Wille — Mon, 26 Jun 2006 22:09:12 +0000

I appreciate your desire to hit homeruns.
But does skipping a valid business model really increase the likelihood of doing so?
A lot of very successful “homeruns” have innovated through business-model innovation, not necessarily a “previously proven” one, but still a business model that was well thought out (ie Priceline of the past bubble).

I am somewhat sceptical of the “no business model besides eyeball”-businesses, because of the mere rules governing it:
1. To be a homerun, you must have a truly massive mass-audience (although advertising revenue may be there, it is not massive per eyeball by any stretch of the imagination).
2. To get a mass-audience, there is an inherent attraction to become more generic and less focused in terms of target audience and functionality.
3. Less focus means less likelihood of people being attracted in the first place, and furthermore of those people being loyal to you (note the demise of Friendster and many other “social networks”).

On a side note, obviously no business model is set in stone, we changed ours something like three times in the last startup I was involved in. But it doesn’t hurt to at least have a general idea..

By: Fabrice Grinda

Fabrice Grinda — Mon, 26 Jun 2006 20:48:16 +0000

E-mail me your Powerpoint presentation, I will give you feedback.

By: Helen

Helen — Mon, 26 Jun 2006 20:42:44 +0000

The capital needs for me are less than $50K. Most of the work, I’ve done on my own. But when I explain that to individuals who have had a chance to look at the short form and hear my pitch, they begin to ‘nay say’ me with “Nobody is going to look at an investment that low”, at the same time they are telling me it has enormous potential. Very frustrating.
Nevertheless, I refuse to give up.

By: Fabrice Grinda

Fabrice Grinda — Mon, 26 Jun 2006 20:08:11 +0000

Helen,

I agree with you that’s why for the first startup going after an idea that has low capital requirements and a higher probability of success (e.g.; an understood business model from the get go) is a good idea…

We’ve all been there – struggling to get something off the ground, failing to raise money, staving off bankruptcy in any way possible, realing in credit card debt…