The Anti-Five Buck Idea

Saturday 1 April 2006 - Filed under Internet

I think I just found the anti Five Buck Idea post.

Russell Beattie writes “WTF 2.0″ on his blog. I like the article, and it is definitely a person coming from a very different part of the spectrum.

Russell has one very good point — he comes from a different business and technological perspective. He’s in the mobile division at Yahoo! and is accustomed to users paying for every single bit and every single tiny stupid-ass service.

I quote from Russell’s post:

I deal with companies every day who have no qualms about charging 25 cents to send 160 characters of data from one person to another, or who have no problems charging $3.00 for a 10kb .gif image or a bad .midi version of a popular song, or even up to $10.00 for a small Java clone of Tetris – a 20 year old game.

Very different from the world of Web 2.0, or heck, the Web in general, where people don’t pay a lot for stuff. Just imagine having to pay for every search query at Google. Or every classified ad browse at Craigslist. Scary. Now I know why SBC is drooling at the idea of the tiered internet.

So, how do people actually make money off the Web? In the model that I often pitch, which is a “flip-it” mentality with buyouts from Google/Y!/Ebay (and to a lesser extent, AOL, MSN, and the media giants), the money is in the conglomeration of services offered by the big companies.

These are real companies that sell real products (there you go, Beattie). They also happen to be competing for loyalty to their brand by offering new and interesting services that drive you to their core business (ads, music, a cut of profits, etc.).

If you want big traffic and brand loyalty these days, you need some community stuff (email, messaging, social networking services), some actual useful tools (maps, classifieds, phone book, search), and you need to show that you are looking to the future (location-based services, innovative community-based services, VOIP, etc.).

So, just maybe, the giants are making these technology grabs in order to stay one step ahead of the other guy. So, the business of real business is finding a technology, an idea that will be cool enough, useful enough, that one of the big companies must have it to stay competitive.

Does it always work? No. Is it “flipping”? In some sense. Is is totally over-hyped these days? You betcha. But can you think of it as really, truly, honest-to-goodness entrepreneurship? The in-your-garage, building-something-with-soldering-irons, hoping-to-kill-the-big-guys, doing-it-for-the-love-of-the-thing kind of entrepreneurship? Yeah, most definitely.

The spirit is back, baby. Back in a big way.

2006-04-01  »  mark