52 Bicycles

Dharmesh Shah has another insightful post: Back to Basics: User Generated Revenue As A Business Model:

I’m going to go out on a limb and say that many software entrepreneurs should avoid the common trend of building software that makes money through “user generated content”.

I’m hoping 2007 is the year of user generated revenue
 
There are lots of good things that come out of the classic “user generated revenue” model:

1. Your customers/users and you have mostly aligned interests.
2. You don’t have to bet the farm on getting the required scale before the cash runs out.
3. Even if you are not a spectacular success, you can at least have a chance at a modest success (which beats a fantastic failure, in my book)
4. Though users have limited time/attention they have a near infinite number of needs.  Instead of competing for their “attention”, I think it’s more fun to collaborate with them to help solve their problems.
5. Though paradoxical, It’s easier to keep a paying customer than it is a non-paying user.  
6. Revenue is the new black.  Don’t knock it till you’ve tried it.  When you deposit your first customer check (or process your first credit card payment), you’ll experience the unique thrill of actually making money.

I heartily agree on all fronts. My support for this runs through my prior posts, a few of which that are on point include:

1. Paul Graham is Hurting the Children
2. If I were running an internet service…
3. Will Price: Broadcast versus Subscription Business Models

This entry was posted on Friday, January 5th, 2007 at 9:16 pm and is filed under Technology Business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed. Reddit This