Comments on: Products vs Businesses http://www.raydeck.com/2006/02/products-vs-businesses/ Startup perspective on the business of technology Tue, 07 Sep 2010 08:52:17 +0000 http://wordpress.org/?v=2.0.1 by: 52 Bicycles » Blog Archive » Web 2.0 = Drug Discovery http://www.raydeck.com/2006/02/products-vs-businesses/#comment-23 Sun, 05 Mar 2006 21:23:13 +0000 http://www.raydeck.com/2006/02/products-vs-businesses/#comment-23 [...] I think I used the term “research lab” in a prior post (yep, I did) but Lisa really gave it the clearer analogy, because this is a “modern” example in high-technology that others can look to guide their business planning. [...] […] I think I used the term “research lab” in a prior post (yep, I did) but Lisa really gave it the clearer analogy, because this is a “modern” example in high-technology that others can look to guide their business planning. […]

]]> by: Ray Deck http://www.raydeck.com/2006/02/products-vs-businesses/#comment-11 Sat, 11 Feb 2006 03:12:49 +0000 http://www.raydeck.com/2006/02/products-vs-businesses/#comment-11 Dharmesh, it's interesting that you should compare entrepreneurs to artists. At the highest level, artists do not have customers - they have patrons. I wonder whether some (misguided) hackers, deep in their souls, really think of VCs as patrons, and the product created as the gift to the world, which is a success if all can see it, rather than a business whose function is to generate cash. Dharmesh, it’s interesting that you should compare entrepreneurs to artists. At the highest level, artists do not have customers - they have patrons. I wonder whether some (misguided) hackers, deep in their souls, really think of VCs as patrons, and the product created as the gift to the world, which is a success if all can see it, rather than a business whose function is to generate cash.

]]> by: Dharmesh Shah http://www.raydeck.com/2006/02/products-vs-businesses/#comment-10 Sat, 11 Feb 2006 00:26:25 +0000 http://www.raydeck.com/2006/02/products-vs-businesses/#comment-10 I like the simplicity of your concepts. Have not heard it put quite that way before. Also, one of the reasons entrepreneurs (especially software entrepreneurs) like product companies so much is because they are much like artists. There is a basic need/desire to have "reach" (i.e. as many users/fans of your software as possible). The fact that there are extremely high profits once the fixed costs of development are done are also particularly attractive. At some level, there is an upper limit to the services model (the multiplier is only ever going to be so high), but in theory, the products business has no limit. Thus, the lure of the product business model (and why so many entrepreneurs take the plunge). I like the simplicity of your concepts. Have not heard it put quite that way before.

Also, one of the reasons entrepreneurs (especially software entrepreneurs) like product companies so much is because they are much like artists. There is a basic need/desire to have “reach” (i.e. as many users/fans of your software as possible). The fact that there are extremely high profits once the fixed costs of development are done are also particularly attractive. At some level, there is an upper limit to the services model (the multiplier is only ever going to be so high), but in theory, the products business has no limit.

Thus, the lure of the product business model (and why so many entrepreneurs take the plunge).

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