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Sorry, your “cool” webapp is probably not going to make money

paraschopra.com

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Re: Sorry, your “cool” webapp is probably not going to make money

#21

Post by paraschopra »

jpcx01 wrote: post #19
paraschopra wrote: post #8

Earlier quoted context omitted.

Exactly. My post is meant for people who actually want to make money. Making apps for skill enhancement, fun and enjoyment is perfectly good. But expecting to make money from such apps and calling them startups is not OK.

What do you mean it's "not OK"? Trying to building something new that people use and love is a perfectly acceptable path to building a startup. pg had a great post on this topic: http://paulgraham.com/organic.html So you have an approach to building products that works for you. Great. But scoffing at people who actually want to build the new amazing things that have a real impact on the world is what I call "not OK".…

I think you mis-understood my point. If you are making something new that people use and love, that's a beautiful thing to do. In fact, open source movement wouldn't exist without it. However, if you want to make money by hoping your new app catches on by itself, that is not OK in my opinion.

Re: Sorry, your “cool” webapp is probably not going to make money

#22

Post by cubicle67 »

paraschopra wrote: post #16
jacquesm wrote: post #11

This is absolutely true. The problem with a market driven approach is that it's hard to convince people to get in to 'glorified bookkeeping' or other stuff like that. Industry applications typically are not sexy but they're a fantastic way to make money because businesses don't have a problem to pay for things that will save them money, time or both. If you're in it for the money go for b2b any time over b2c, b2c is…

Yep, agree with your recommendation of B2B. Going B2B instantly simplifies a lot of issues that startups face because (as you say) businesses are usually inclined to pay money for services even if it is in $100-$1000/mo range. Consumers, on the other hand, will cringe at the sight of paying $5. 99 cents apps, thanks so much for setting expectations of consumers that everything on the web should be free or sub $1 rang…

you know what 99c apps have done?

They've got people paying for software. Normal people. People who have probably never paid for software in their life, save for Office (probably bundled with their PC), and a few XBox games

They've got used to paying 99c for apps, then they've slowly adjusted their price expectations up to the $5-10 range for iPad apps, and the advent of the Mac Store looks like helping ease prices people are willing to pay even higher. Pixelmator has sold more than a few copies at $30. Cheap for what it is, but people are buying it. Apple have trained people to pay for software

Re: Sorry, your “cool” webapp is probably not going to make money

#23

Post by Maro »

The article's market-first approach:

    * Find an industry (ideally, an old fashioned one) where people are making money
    * Find the single differentiator which will put your app apart in the already established industry (read or research what pain points are still not addressed by top 3 solutions)
    * Make a web app, market it, refine it based on feedback, monetize the app
    * Slowly incorporate all standard features expected out of a solution in that industry so you can shoot to be a market leader
I think this sounds great, but the key point is "read or research what pain points are still not addressed by top 3 solutions" which I think is very hard from outside the given industry.

Re: Sorry, your “cool” webapp is probably not going to make money

#24

Post by jacquesm »

jpcx01 wrote: post #19
paraschopra wrote: post #8

Earlier quoted context omitted.

Exactly. My post is meant for people who actually want to make money. Making apps for skill enhancement, fun and enjoyment is perfectly good. But expecting to make money from such apps and calling them startups is not OK.

What do you mean it's "not OK"? Trying to building something new that people use and love is a perfectly acceptable path to building a startup. pg had a great post on this topic: http://paulgraham.com/organic.html So you have an approach to building products that works for you. Great. But scoffing at people who actually want to build the new amazing things that have a real impact on the world is what I call "not OK".…

I think you miss the point entirely and quoting Paul Graham without understanding what he writes is not going to help either.

What Paras is getting at here is that if your goal is to make money then you are probably better off building something that has that premise baked in to it from the first moment rather than to just go and make some consumer app that might get traction but that will be hard to monetise.

The 'people' from Pauls piece can be interpreted as both consumers and businesses, and if you aim for 'people' that are willing and used to spending money for the kind of service that you provide then you stand a much better chance of making money than if you just 'build anything people love and use'.

Sure, youtube is a great counterargument, but barring being bought out by some big company such a success could easily be lethal. See 'imeem' and lots of other highly popular but ultimately losing propositions.

Making money should not be an afterthought, it should be a focal point if that is your motivation to do this sort of thing. If you do it for fun or because of a drive to change the world for the better, if you're already rich from past ventures and any one of a hundred other reasons why you are not currently in it for the money then sure, go ahead and do that thing that scratches your itch.

But if you plan on paying the bills focus on where the money is made first.

Re: Sorry, your “cool” webapp is probably not going to make money

#25

Post by jpcx01 »

jacquesm wrote: post #24
jpcx01 wrote: post #19

Earlier quoted context omitted.

What do you mean it's "not OK"? Trying to building something new that people use and love is a perfectly acceptable path to building a startup. pg had a great post on this topic: http://paulgraham.com/organic.html So you have an approach to building products that works for you. Great. But scoffing at people who actually want to build the new amazing things that have a real impact on the world is what I call "not OK".…

I think you miss the point entirely and quoting Paul Graham without understanding what he writes is not going to help either. What Paras is getting at here is that if your goal is to make money then you are probably better off building something that has that premise baked in to it from the first moment rather than to just go and make some consumer app that might get traction but that will be hard to monetise. The 'p…

Nah. pg's post fits perfectly here. Specifically the part "Don't be discouraged if what you produce initially is something other people dismiss as a toy."

This is exactly what paras is doing. Dismissing apps he doesn't think can make money as toys. Why should the focus just be on making money?

Saying "if your goal is to make money" is sort of strange to me anyways. Probably because my goal is not to make money, but to build new and interesting things that have an impact. Focusing just on money to start seems like the path to building yet another 37signals basecamp knockoff.

Re: Sorry, your “cool” webapp is probably not going to make money

#26

Post by paraschopra »

Maro wrote: post #23

The article's market-first approach: * Find an industry (ideally, an old fashioned one) where people are making money * Find the single differentiator which will put your app apart in the already established industry (read or research what pain points are still not addressed by top 3 solutions) * Make a web app, market it, refine it based on feedback, monetize the app * Slowly incorporate all standard features expect…

Well there has got to be at least one "hard" part in making money, otherwise wouldn't everyone be doing the same? There is no easy way to make money or successful but it isn't impossible either.

I will give you my example. When I was starting out with Wingify (Visual Website Optimizer), I had absolutely no idea or industry connections in online marketing industry. But I started reading blogs, used existing solutions, talked to people and then eventually figured out that sufficiently large number of people do A/B testing, pay for it and right now it is hard enough to justify a new solution that simplifies it. The idea of "Visual A/B testing" wasn't something I realized overnight. It was a result of more than a year of trying to understand pain points of a "large enough" industry.

If you spend enough time researching an industry, you will eventually find some great opportunities.

Re: Sorry, your “cool” webapp is probably not going to make money

#27

Post by jacquesm »

jpcx01 wrote: post #25
jacquesm wrote: post #24

Earlier quoted context omitted.

I think you miss the point entirely and quoting Paul Graham without understanding what he writes is not going to help either. What Paras is getting at here is that if your goal is to make money then you are probably better off building something that has that premise baked in to it from the first moment rather than to just go and make some consumer app that might get traction but that will be hard to monetise. The 'p…

Nah. pg's post fits perfectly here. Specifically the part "Don't be discouraged if what you produce initially is something other people dismiss as a toy." This is exactly what paras is doing. Dismissing apps he doesn't think can make money as toys. Why should the focus just be on making money? Saying "if your goal is to make money" is sort of strange to me anyways. Probably because my goal is not to make money, but t…

> Dismissing apps he doesn't think can make money as toys.

No, it's just that bills want to be paid and if you plan on paying the bills from your venture then you should plan on doing something where making money is not a question but (assuming proper execution) as good as guaranteed. Typically in the business world that means you start signing up your (potential, pilot) customers before you have a product.

Dismissing apps that can't make money as toys is not the same as saying that 'what you produce initially is something other people dismiss as a toy'. Really, they're not even close to being the same thing.

> Maybe thats just because my goal is not to make money. It's to build interesting things and have an impact.

Yes, that probably has something to do with it. If making money is a secondary goal to you for whatever reason then you are in a luxury situation, one that likely the vast majority of the people out there envy you very much for.

The interesting part for me is that typically developing without a monetary incentive to do so leads to lots of wasted time and effort, having a simple and concrete number to measure the success of your application by (turnover vs 'eyeballs') works wonders to stay focused.

"Make something people want" is not a religious item, it's common sense if you want to make money you had better make sure that there is a market for your product. That's the 'want' bit.

Developing 'just for eyeballs' or 'impact' or 'personal interest', 'technical fascination' and so on is great but without a monetization strategy you might as well be living in 1999.

You keep taking PGs words out of context and applying them to the writing of Paras because in your mind there is a seeming contradiction but I think the similarities are far larger than the differences.

YC typically does not invest in companies that have no clear idea of how they plan to make money, even when they're focused on the consumers.

Re: Sorry, your “cool” webapp is probably not going to make money

#28

Post by angdis »

The key word here is _probably_.

There is room enough for both blue-sky idealists and pragmatic business grinders. We need both and both are likely to fail more often than they succeed.

It might be easy to criticize somebody who follows their passion and then fails on business issues but there are many ways to measure "success" and not all of them line up with a VC's definition of "success".

Re: Sorry, your “cool” webapp is probably not going to make money

#29

Post by jacquesm »

cubicle67 wrote: post #22
paraschopra wrote: post #16

Earlier quoted context omitted.

Yep, agree with your recommendation of B2B. Going B2B instantly simplifies a lot of issues that startups face because (as you say) businesses are usually inclined to pay money for services even if it is in $100-$1000/mo range. Consumers, on the other hand, will cringe at the sight of paying $5. 99 cents apps, thanks so much for setting expectations of consumers that everything on the web should be free or sub $1 rang…

you know what 99c apps have done? They've got people paying for software. Normal people. People who have probably never paid for software in their life, save for Office (probably bundled with their PC), and a few XBox games They've got used to paying 99c for apps, then they've slowly adjusted their price expectations up to the $5-10 range for iPad apps, and the advent of the Mac Store looks like helping ease prices p…

As opposed to all that open source stuff for free in the repositories, yes. But paying for software is something that has meanwhile been superseded by people paying for services, and that's where the real money is in the long run.

Someone paying $10 for your software is great but not as great as someone paying $4.95 monthly for the use of a service.

The difference is that if you intend to hold on to your userbase on a subscription basis that fart apps are not going to cut it (pun intended), you will have to deliver value for the money your subscribers pay you.

Apple has not conditioned people to pay for software any more than google has conditioned people to click on ads, both companies simply used their economies of scale to make it worthwhile to market to their particular audience, google through their adwords (not adsense!) program and apple through their app store.

Just wait for the 'facebook phone' and it's associated app store, it's only a matter of time.

It's not as though Steve Jobs invented 'software for sale' with the app store, software has been sold to individuals and businesses alike for decades now, the things that have changed the equation here are:

  - download sites for PC software
  
  - open source

  - massive piracy

Re: Sorry, your “cool” webapp is probably not going to make money

#30

Post by StavrosK »

swombat wrote: post #12
alexro wrote: post #7

Yes, but ... we are on YC site and at least twice a year we hear about cool companies appearing out of the blue with crazy idea and some of them get acquired or start bringing profits. So, the 'cool' factor will continue to have its benefits and is a good method to actually get going initially.

I believe DHH coined the name for those: Lottery tickets. http://www.justin.tv/hackertv/b/259414909

I've been calling them that for years now, and I suspect others have too, so the term is hardly novel, but that's exactly what they are.

Throw enough things at the wall, a few will stick.

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