The Rush To Monetize The Internet…AKA Watching Turtles Screw
I still remember back in the good ‘ol days of Web 2.0 (like back in June or July) when having tons of users meant you were rich. Your company could have virtually no income and that was ok. You were valued by the number of users you had. Some would say $20 a head, others would say $50 or more. So, hey, if you had a million users, you were valued between 20 and 50 million dollars. “How are they going to make money?” some would ask. “We will figure it out later!” would be the response. “It’s about market share.” So is it still about market share? I guess not since the mad rush to become profitable has started.
Only on the internet does this occur. Only on the internet is this accepted. Whereas it is common practice for a company entering a new market to have a “war chest” to spend to gain (or buy) market share, they do have a time-line and plan for profitability. They don’t always achieve it (in fact, most don’t), but at least they have a plan.
For years, the venture capitalists threw millions at every harebrained scheme that came out of the valley. Then the economy goes south. They all issue statements”Get real or go home.” But they are still handing out money. Just look here, here, here, here and here (I could go on, but you get the point). The total they are handing out is declining. But companies are still getting millions. But why do some of these companies need so much start-up money? I see start-ups that have received 10’s of millions of dollars. And I see start-ups that have recieved none. Quite often, I can see little difference between the two by visiting their site.
