Sorry, your “cool” webapp is probably not going to make money(paraschopra.com)
paraschopra.com
Sorry, your “cool” webapp is probably not going to make money
http://paraschopra.com/blog/entrepreneurship/webapp-is-not-going-to-make-money.htm
23 comments
The single most important anecdote I've ever heard about software is this:
In the early days of VisiCalc, Dan Bricklin travelled with his Apple II, demonstrating his software to potential customers. The response from 'computer people' was generally fairly muted - they didn't see what spreadsheets did that they couldn't already do in BASIC. People with no experience of computers assumed that computers could do damned near anything, so they weren't impressed. The response from accountants was quite different.
There was one particular instance at a trade fair, when Dan noticed a smartly dressed older gentleman paying very close attention to his demonstration. At the end of the demo, he approached Dan with a cheque already in his hand. Dan noticed that the man's hands were shaking; Although at the time an Apple II was an expensive purchase, the gentleman looked like he could comfortably afford it.
Dan asked him if he was nervous. The gentleman responded with great excitement, explaining that what he had just seen would completely transform his job. He talked about his career as an accountant, how his work had been changed by the introduction of tabulation machines and electronic calculators; He explained how this new invention would free him from countless hours of tedious calculation, allowing him to effortlessly play with numbers.
To Bricklin, VisiCalc was a clever little piece of software that paid him a good wage. To the gentleman, it was a complete transformation of what he did all day, a liberating technology, even a new lease of life. VisiCalc restored his interest in his work and made him genuinely excited to get up in the morning.
If we see functional business apps as boring, it is only through our own lack of imagination. Few of us are likely to significantly change the computing industry, but each of us has the very real opportunity to transform another industry. As software developers, we are uniquely privileged in being able to turn some small part of someone's work into play. As Steve Blank so often points out, when we look beyond our own walls and see how we could help people do things, the possibilities are limitless.
In the early days of VisiCalc, Dan Bricklin travelled with his Apple II, demonstrating his software to potential customers. The response from 'computer people' was generally fairly muted - they didn't see what spreadsheets did that they couldn't already do in BASIC. People with no experience of computers assumed that computers could do damned near anything, so they weren't impressed. The response from accountants was quite different.
There was one particular instance at a trade fair, when Dan noticed a smartly dressed older gentleman paying very close attention to his demonstration. At the end of the demo, he approached Dan with a cheque already in his hand. Dan noticed that the man's hands were shaking; Although at the time an Apple II was an expensive purchase, the gentleman looked like he could comfortably afford it.
Dan asked him if he was nervous. The gentleman responded with great excitement, explaining that what he had just seen would completely transform his job. He talked about his career as an accountant, how his work had been changed by the introduction of tabulation machines and electronic calculators; He explained how this new invention would free him from countless hours of tedious calculation, allowing him to effortlessly play with numbers.
To Bricklin, VisiCalc was a clever little piece of software that paid him a good wage. To the gentleman, it was a complete transformation of what he did all day, a liberating technology, even a new lease of life. VisiCalc restored his interest in his work and made him genuinely excited to get up in the morning.
If we see functional business apps as boring, it is only through our own lack of imagination. Few of us are likely to significantly change the computing industry, but each of us has the very real opportunity to transform another industry. As software developers, we are uniquely privileged in being able to turn some small part of someone's work into play. As Steve Blank so often points out, when we look beyond our own walls and see how we could help people do things, the possibilities are limitless.
This is one of the most inspiring comments I've read on HN in a long time.
When I first read the article I had the same sort of "yeah, yeah, make money at the expense of being bored, etc." response as some of the other commenters here but afte reading this a light went on.
We spend so much time banging our heads on the wall looking for ways to out-do each other in the software realm when there are people in other industries starving for the most basic of the innovation we take for granted, if we can only find a way to make it relevant.
Water water everywhere...yes I am revved up about hacking again!
When I first read the article I had the same sort of "yeah, yeah, make money at the expense of being bored, etc." response as some of the other commenters here but afte reading this a light went on.
We spend so much time banging our heads on the wall looking for ways to out-do each other in the software realm when there are people in other industries starving for the most basic of the innovation we take for granted, if we can only find a way to make it relevant.
Water water everywhere...yes I am revved up about hacking again!
This is absolutely true. But two things: (1) Dan was already passionate about VisiCalc. It's not like he and Rich Franklin weren't particularly interested in numbers but thought they could save accountants a few bucks a day. And (2) You are describing something that might transform someone's job or disrupt an industry. That's very motivational. But this is not the same thing as "Hey, someone might pay a few bucks for these crud operations."
The ideal business is one where (a) you are already motivated by the subject matter, 2) you will transform somebody else's life or business, and III. they are willing to pay for it.
The ideal business is one where (a) you are already motivated by the subject matter, 2) you will transform somebody else's life or business, and III. they are willing to pay for it.
I'm talking about the days, weeks, and months that precede these eureka moments. The customer who hugs you tearfully, thanking your for changing their life may show up tomorrow, but today all you can see is an app that nobody seems to be using.
Those can be rough times. If it's an app that you use (ie. eat your own dog food), that can help you through this stage. Otherwise, motivation can deplete quickly and you walk away before meeting the person whose life you would have changed.
Those can be rough times. If it's an app that you use (ie. eat your own dog food), that can help you through this stage. Otherwise, motivation can deplete quickly and you walk away before meeting the person whose life you would have changed.
I don't mean to detract from the message of this story, but source? I'm hoping you can point me in the direction of similar stories of software lore.
Dan Bricklin' story (and many others inccluding interviews of the founders of 37 signals, apple, adobe, yahoo, flickr etc) is featured in "Founders At Work". Great inspirational read, but there is no trace of an old trembling man with a cheque though :-)
"With a funky web app, at least your friends and family might understand it and think it's cool."
Perhaps if you're in college, or keeping up your day job. But none of my friends or family thought it was "cool" when I quit my day job after we got a little bit of traction. They thought it was something more along the lines of "completely batshit insane". As I recall, it actually made my parents cry.
The point is: it's pretty hard no matter what you're working on. Everything becomes boring after a while, and outside of the valley it's hard to find a culture where people will actually support a decision to quit your day job and work on a startup.
Perhaps if you're in college, or keeping up your day job. But none of my friends or family thought it was "cool" when I quit my day job after we got a little bit of traction. They thought it was something more along the lines of "completely batshit insane". As I recall, it actually made my parents cry.
The point is: it's pretty hard no matter what you're working on. Everything becomes boring after a while, and outside of the valley it's hard to find a culture where people will actually support a decision to quit your day job and work on a startup.
Agreed.
I look at it this way: you can afford to do something which is just a lot of fun but not making any or lots of money, as long as you are not in debt from other people. The debt can be in the form of money (borrowing from friends or family, investors) or time (ignoring friends and family).
I look at it this way: you can afford to do something which is just a lot of fun but not making any or lots of money, as long as you are not in debt from other people. The debt can be in the form of money (borrowing from friends or family, investors) or time (ignoring friends and family).
This rings true with me. I started my own startup in 2009 in what could be considered a relatively boring but proven industry. I focused on price and SEO and it is currently making decent money and growing 30% month on month.
I am still very excited and motivated by it all, but I can't help feeling just a little jealous when I see some of the 'cool' webapps that spring up on here.
I am still very excited and motivated by it all, but I can't help feeling just a little jealous when I see some of the 'cool' webapps that spring up on here.
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 sexy, everybody will write about you if you score but the fact is you most likely won't.
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 sexy, everybody will write about you if you score but the fact is you most likely won't.
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 range.
99 cents apps, thanks so much for setting expectations of consumers that everything on the web should be free or sub $1 range.
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
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
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:
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 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
And for a long time the first place to get software from (particularly games) were BBSs.
In these times of Steam, App Store(s) & easy on-line purchases via the likes of Paypal I expect people actually buy software a lot more often than in the 80s or 90s.
The internet has changed the piracy game completely, copying a cassette tape or ROM was time consuming and required some skill.
Download.com and Tucows basically destroyed the shareware movement, barring a few exceptions.
The upside is that there are now many more people that are using software so the markets are much larger in potential and the area where the app stores shine are convenience.
A few clicks to download and pay for a piece of software is a massive convenience when compared to the hassle that used to be involved in buying licensed software.
Download.com and Tucows basically destroyed the shareware movement, barring a few exceptions.
The upside is that there are now many more people that are using software so the markets are much larger in potential and the area where the app stores shine are convenience.
A few clicks to download and pay for a piece of software is a massive convenience when compared to the hassle that used to be involved in buying licensed software.
The internet has changed the piracy game completely
Eh, were you actually around then? Copying floppy disks was generally just as easy as anything else, and the skill level of the average computer user was much, much higher. Based on my experience I'd say piracy per capita was nearly 100% in the 80's. These days there are large swaths of computer users who simply don't install anything that isn't pushed at them, let alone browse through TPB. Before the Internet became popular in the mid 90's a large number of BBS's were dedicated to piracy.
Keep in mind ASP on software is a fraction of what it once was. In 1983, Lotus 1-2-3 sold for $495. Duplicating the functionality of the $150 Office Home and Student would have been over $1000.
Eh, were you actually around then? Copying floppy disks was generally just as easy as anything else, and the skill level of the average computer user was much, much higher. Based on my experience I'd say piracy per capita was nearly 100% in the 80's. These days there are large swaths of computer users who simply don't install anything that isn't pushed at them, let alone browse through TPB. Before the Internet became popular in the mid 90's a large number of BBS's were dedicated to piracy.
Keep in mind ASP on software is a fraction of what it once was. In 1983, Lotus 1-2-3 sold for $495. Duplicating the functionality of the $150 Office Home and Student would have been over $1000.
I actually made pretty good money in the early 80's from programming games and later selling licensed software on the net.
Yes, large numbers of BBS's were dedicated to piracy but large numbers of meters of shelf space in retail stores were dedicated to 'boxed' software too.
Yes, large numbers of BBS's were dedicated to piracy but large numbers of meters of shelf space in retail stores were dedicated to 'boxed' software too.
I think trotsky is referring to sneakernet piracy, not the odd BBS. I was very young in the '80s, but I remember all the computer users I knew were extremely liberal in their sharing of programs, the same way that people were with music cassettes. "Oh, I bought this cool game. I think you'll like it. Here, let me make you a copy."
Maybe the game has changed by the time the 5¼-inch floppy becamse popular - or maybe it was just different where I'm from (Israel) from the Netherlands - but I don't think I've even seen more than maybe 10 pieces of legal, original packed software (except in stores) until the time CDs (which for a while were significantly harder to copy) started replacing floppies.
Is there any evidence they've "got used to it"?
People got used to paying for ringtones, and then the market pretty much disappeared.
Part of me thinks the app store model is a short term fad.
People got used to paying for ringtones, and then the market pretty much disappeared.
Part of me thinks the app store model is a short term fad.
Ringtones were pretty much always a worthless ripoff. There might be particular market segments in the app store that will die off (I don't know, maybe book apps will be superseded by ebooks), but the App Store as a whole offers a lot of value and convenience, and the "fad" for those things has been going strong for hundreds of years now.
I'd say the vast majority of apps area ripoff. The majority are available on various websites for free.
Amen, If I could I would upvote all day..
Hearing my uncle say 'This is less than a coffee, why not?' or 'For this price (10$), I get more fun and entertainment than going to the cinema' has no price.
Thanks Apple
Hearing my uncle say 'This is less than a coffee, why not?' or 'For this price (10$), I get more fun and entertainment than going to the cinema' has no price.
Thanks Apple
I think the web app-building crowd here is divided into two groups of hackers: Those who are in it to build businesses and those who just want to create apps that people use.
Everybody likes money, but there's a big group of people out there that only want people to use their apps and are not in it for the money.
Everybody likes money, but there's a big group of people out there that only want people to use their apps and are not in it for the money.
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".
After someone trailblazes the idea and builds something that gets traction, then we can expect legions of "you guys" who just want to monkey their idea and take a piece of the pie.
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".
After someone trailblazes the idea and builds something that gets traction, then we can expect legions of "you guys" who just want to monkey their idea and take a piece of the pie.
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.
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.
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.
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.
> 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.
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.
> 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.
That's sort of the point Paras is making though. If your building a new and interesting things to have impact, but your expecting it to make money and calling it a startup, it's not OK.
> Why should the focus just be on making money?
He's not saying it should.
> Dismissing apps he doesn't think can make money as toys
He's not doing this either.
That's sort of the point Paras is making though. If your building a new and interesting things to have impact, but your expecting it to make money and calling it a startup, it's not OK.
> Why should the focus just be on making money?
He's not saying it should.
> Dismissing apps he doesn't think can make money as toys
He's not doing this either.
I am expecting to make money. And I am calling what I do a startup. And the my goal of the startup is to build new and interesting things.
I guess thats not OK
I guess thats not OK
You're being obtuse on purpose. But I'll bite:
> I am expecting to make money.
Merely expecting to make money doesn't make money. You have to have a plan to make money. You can expect things all you want, but they won't happen.
> And I am calling what I do a startup.
You can call what you do a startup. Calling it a startup doesn't make it so. A rose by any other name and all that jazz.
> And the my goal of the startup is to build new and interesting things.
See, that's your problem. You don't even know what you are building. "New and interesting things"? What is that? You have to be specific.
So, literally, you are expecting to make money from a startup where you build new and interesting things. You don't know what those new and interesting things are, or how you can make money from it, or even if you can make money from it. You don't have a business plan. You don't even know what market you'll be in (the building new and interesting things market?).
> I am expecting to make money.
Merely expecting to make money doesn't make money. You have to have a plan to make money. You can expect things all you want, but they won't happen.
> And I am calling what I do a startup.
You can call what you do a startup. Calling it a startup doesn't make it so. A rose by any other name and all that jazz.
> And the my goal of the startup is to build new and interesting things.
See, that's your problem. You don't even know what you are building. "New and interesting things"? What is that? You have to be specific.
So, literally, you are expecting to make money from a startup where you build new and interesting things. You don't know what those new and interesting things are, or how you can make money from it, or even if you can make money from it. You don't have a business plan. You don't even know what market you'll be in (the building new and interesting things market?).
You're right, I'm not really happy with my input in the thread. Obtuse is a good word for it.
I doubt we have that different of an outlook. My passionate disagreement with the original author however is the belief you have to put making money above all else. I've seen too many startups end in failure (many of them clients) because they tried to monetize too early, or put nickle and diming customers above user satisfaction.
I doubt we have that different of an outlook. My passionate disagreement with the original author however is the belief you have to put making money above all else. I've seen too many startups end in failure (many of them clients) because they tried to monetize too early, or put nickle and diming customers above user satisfaction.
I think you've got the article exactly backwards. As I read it, the point is not that you have to put making money above all else. The point is that your chances of making money improve dramatically if you consider first what people are willing to pay money for.
I find that the other approach is more likely to invent the kind of annoying and harmful revenue strategies you're criticizing. A product that has a built-in market of customers waving money does not need to stoop to that level to turn a profit. You can focus on making a product that your customers like and making sure they know about it.
How you prioritize making money is up to you. The OP is a helpful tip on getting it if you want it.
I find that the other approach is more likely to invent the kind of annoying and harmful revenue strategies you're criticizing. A product that has a built-in market of customers waving money does not need to stoop to that level to turn a profit. You can focus on making a product that your customers like and making sure they know about it.
How you prioritize making money is up to you. The OP is a helpful tip on getting it if you want it.
> My passionate disagreement with the original author however is the belief you have to put making money above all else.
That's where the confusion is. That's not what the author intends. Basically what he's saying is that you can't just build something and expect to get paid for it. Switch out the word expect for "demand" and that might help matters. Just because you create something doesn't mean people are obligated to pay for it. Expecting that is wrong.
The author doesn't believe in putting money above all else. You don't even need to monetize early. But you need to have a plan. Just expecting things to work out all right is the wrong way to do it.
That's where the confusion is. That's not what the author intends. Basically what he's saying is that you can't just build something and expect to get paid for it. Switch out the word expect for "demand" and that might help matters. Just because you create something doesn't mean people are obligated to pay for it. Expecting that is wrong.
The author doesn't believe in putting money above all else. You don't even need to monetize early. But you need to have a plan. Just expecting things to work out all right is the wrong way to do it.
It's OK if you have a plan for how you'll make money. If you're just building something cool, and figure, somehow..., later..., you'll make money, that's what he is saying is not OK.
DHH at 37signals would probably agree too since that's his thing -- if you can't charge from the get go, you're not building a business, you're just gambling on 'good luck' happening somewhere (ie getting bought out by Google, etc)
DHH at 37signals would probably agree too since that's his thing -- if you can't charge from the get go, you're not building a business, you're just gambling on 'good luck' happening somewhere (ie getting bought out by Google, etc)
I think Paul Grahams essay IS somewhat contradicting Paras's essay. For example look at this paragraph:
"organic startup ideas usually don't seem like startup ideas at first. We know now that Facebook was very successful, but put yourself back in 2004. Putting undergraduates' profiles online wouldn't have seemed like much of a startup idea. And in fact, it wasn't initially a startup idea. When Mark spoke at a YC dinner this winter he said he wasn't trying to start a company when he wrote the first version of Facebook. It was just a project. So was the Apple I when Woz first started working on it. He didn't think he was starting a company. If these guys had thought they were starting companies, they might have been tempted to do something more "serious," and that would have been a mistake."
I think Paul is suggestinging (at least emotionally) that you shoud follow your creativity and hope for a later opportunity of a great business.
In my opinion Paul is focusing on the kind of businesses which are mostly B2C, very innovative and very very risky.
My taste is somewhere in-between: my idea is that somewhow the joy of creativity should be combined with some seemingly boring old fashioned B2B market's need.
"organic startup ideas usually don't seem like startup ideas at first. We know now that Facebook was very successful, but put yourself back in 2004. Putting undergraduates' profiles online wouldn't have seemed like much of a startup idea. And in fact, it wasn't initially a startup idea. When Mark spoke at a YC dinner this winter he said he wasn't trying to start a company when he wrote the first version of Facebook. It was just a project. So was the Apple I when Woz first started working on it. He didn't think he was starting a company. If these guys had thought they were starting companies, they might have been tempted to do something more "serious," and that would have been a mistake."
I think Paul is suggestinging (at least emotionally) that you shoud follow your creativity and hope for a later opportunity of a great business.
In my opinion Paul is focusing on the kind of businesses which are mostly B2C, very innovative and very very risky.
My taste is somewhere in-between: my idea is that somewhow the joy of creativity should be combined with some seemingly boring old fashioned B2B market's need.
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.
If only there were already a good word for a technical project that one does for fun.
Maybe a four-letter word? Rhyming with "sack"? ;)
Maybe a four-letter word? Rhyming with "sack"? ;)
I think the vast majority is in a third group in the middle: those who say they just want to create apps that people use, but harbour secret hopes of turning it into a huge business some day.
Just because it's free doesn't mean people will use it. If you just want to create apps that people use you might still get disappointed, unless you enjoy the process of building or scratch your own itch.
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there's a big group of people out there that only want people to use their apps and are not in it for the money.
It is my well considered experience that this is simply untrue.
Sooner or later even these supposed saints of usability will come to wonder "why won't people pay me for my hard work?"
It is my well considered experience that this is simply untrue.
Sooner or later even these supposed saints of usability will come to wonder "why won't people pay me for my hard work?"
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
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.
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.
How long does it take? If it takes 12 months, you can try 3-4 different app ideas in that timeframe, if you're good enough.
You're comparing two different risk profiles, and I don't think one or the other is clearly better.
You're comparing two different risk profiles, and I don't think one or the other is clearly better.
And since you personally advocate for that route have you achieved a financial success already (even in small)?
From the links at the bottom of the OP, it would appear so: http://paraschopra.com/blog/personal/how-making-money-change...
Think of it this way: there are gas stations all over the place. But new ones open up all the time. Why? Do the owners know something everyone else doesn't?
I don't understand your point at all. What does opening a gas station on a busy street have to do with producing a useful tool for an industry about which you have no personal experience? Pretty much everybody understands what a gas station's customers need — they need gas.
How much gas per day? Where's the best place to open a station? Is it better to build one or look for one that's shut down and re-open? How often do you schedule tank refills? What regulations do you have to comply with?
And you'll go broke quite quickly if gas is all you can sell!
The point I was making (poorly, I admit) is that just about everyone who starts a business has to learn how the industry works one way or another. Nothing is ever as simple as it seems. "Producing a useful tool for an industry about which you have no personal experience" really isn't a larger obstacle than most entrepreneurs have to get past.
And you'll go broke quite quickly if gas is all you can sell!
The point I was making (poorly, I admit) is that just about everyone who starts a business has to learn how the industry works one way or another. Nothing is ever as simple as it seems. "Producing a useful tool for an industry about which you have no personal experience" really isn't a larger obstacle than most entrepreneurs have to get past.
For some, building software is the answer to the question: 'How can I make money?'
For others, building software is the answer to the question: 'What would I do all day if I didn't have to worry about making money?'
For others, building software is the answer to the question: 'What would I do all day if I didn't have to worry about making money?'
I ask both questions and get the same answer.
Paraschopra has written one of the secrets to building a low risk/high returns web app which is re-echoed here by the founder of sharefile.com.
http://www.sharefile.com/blog/seeking-startup-advice-look-no...
In my opinion, those of us who want to build a business from our startup, shouldn't focus on the high risk / high return approach of building b2c apps dependent on advertising and large user base. According to Amy Hoy, we can all easily build a 30 x 500 wep app (http://unicornfree.com/30x500/). That is 500 customers paying $30 per month which gives us $15k monthly and $180,000 annually. With just 500 users and this finances in place, we can then swing for the fences in our second start-up, knowing that we don't have to eat ramen or beg anyone for funding in the beginning. This also ensures we have the power to take investments only from the right kind of investors and more importantly, it put us in a position to retain controlling shares in the new start-up. Two examples of people that took this approach are Dharmesh shah of hubspot and Joel spolsky with stackexchange. These were there second start-ups after selling the 1st in the case of Dharmesh and still making money from fogcreek in the case of Joel.
In my opinion, those of us who want to build a business from our startup, shouldn't focus on the high risk / high return approach of building b2c apps dependent on advertising and large user base. According to Amy Hoy, we can all easily build a 30 x 500 wep app (http://unicornfree.com/30x500/). That is 500 customers paying $30 per month which gives us $15k monthly and $180,000 annually. With just 500 users and this finances in place, we can then swing for the fences in our second start-up, knowing that we don't have to eat ramen or beg anyone for funding in the beginning. This also ensures we have the power to take investments only from the right kind of investors and more importantly, it put us in a position to retain controlling shares in the new start-up. Two examples of people that took this approach are Dharmesh shah of hubspot and Joel spolsky with stackexchange. These were there second start-ups after selling the 1st in the case of Dharmesh and still making money from fogcreek in the case of Joel.
As a startup founder in the internet space i can relate to this very well. For a founder with a technical background like me its hard to sometimes get the thinking off of the details of implementation. I like to think and work on architecture, under-the-hood features, scalability etc, but in the end it wont matter if noone uses the product. Users dont see and dont care for any of that, they want to you improve what they deal with everyday. So you have to find a good balance between that to make your product better but still work on the overall technical structure to keep things smoothly.
Also marketing probably is much more important than the quality of your code or even app.
"So, instead of an image-gallery app, why not make a survey software specifically targeted at, say, event attendees."
Shameless plug: check out our startup, http://yorn.com, which does exactly this.
Shameless plug: check out our startup, http://yorn.com, which does exactly this.
Your site design completely rocks. It's fantastic.
I would add, even better is to start with the delivery channel. If you've got ways to reach a market which spends money, you're yet another step ahead.
Interesting. Can you elaborate what you mean by delivery channel?
Delivery channel = A way to reach the market.
For example, maybe you have ideas for products in half a dozen industries, but in one of those industries you happen to have a good friend who works in it (and thus has contacts there) and know the editor of one of the industry trade magazines. Those are both delivery channels into that industry. Compared to another niche where you have no contacts, it is much better to build a startup for that niche where you have some way to reach the market.
This may be already implied in your mind, but a lot of people wouldn't get it from reading your article. They'd start listing out industries and then picking one of them. I'm suggesting: list out your deliver channels first, and go from there (as a kind of step 0 in your process).
For example, Stack Overflow had two excellent delivery channels to reach programmer communities around the world (Joel and Jeff's blogs). It's fair to say that those two channels "made" stack-overflow.
For example, maybe you have ideas for products in half a dozen industries, but in one of those industries you happen to have a good friend who works in it (and thus has contacts there) and know the editor of one of the industry trade magazines. Those are both delivery channels into that industry. Compared to another niche where you have no contacts, it is much better to build a startup for that niche where you have some way to reach the market.
This may be already implied in your mind, but a lot of people wouldn't get it from reading your article. They'd start listing out industries and then picking one of them. I'm suggesting: list out your deliver channels first, and go from there (as a kind of step 0 in your process).
For example, Stack Overflow had two excellent delivery channels to reach programmer communities around the world (Joel and Jeff's blogs). It's fair to say that those two channels "made" stack-overflow.
Yes, I think if you are considering multiple industries that make money you will automatically gravitate towards the most "practical" one where you have more familiarity. That said, in my opinion in any industry creating a delivery channel is not incredibly difficult but it does give you an unfair advantage while starting out.
This actually brings up a third alternative... start with the industries, as you suggest, but then, as part of your hypothesis-resolution (see http://swombat.com/2011/1/7/how-to-evaluate-and-implement-st...), try to create delivery channels into those industries that you like.
Then follow the one where you best succeed into building delivery channels.
Best of both worlds?
Then follow the one where you best succeed into building delivery channels.
Best of both worlds?
Solid advice.
Young people have to learn this the hard way. Today, it seems everyone wants to write a FaceBook type app and be hugely popular with mainstream folks (a household name). However, there are tons of devs (mostly people you seldom ever hear about and who hardly anyone knows) making a great living writing libraries, device drivers and other non-killer, yet useful software.
Young people have to learn this the hard way. Today, it seems everyone wants to write a FaceBook type app and be hugely popular with mainstream folks (a household name). However, there are tons of devs (mostly people you seldom ever hear about and who hardly anyone knows) making a great living writing libraries, device drivers and other non-killer, yet useful software.
That explains what I'm working on right now to a T. It's an industry that is currently being run on fax and lots of manual data entry. A big key for us was having connections with people inside, which made it easier to learn exactly what they were looking for and then ultimately set up sales meetings.
Ideally, you want a "cool" webapp that can provide an entry into a viable market. The "cool" part gets you noticed among early adopters, who talk you up until you get noticed in the marketplace. Because there is some cost in getting into those marketplaces - you have to set up booths at trade shows, or get PR in industry specific publications. "Coolness" can reduce those expenses or help you get partnerships or funding.
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.
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
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.
Throw enough things at the wall, a few will stick.
That goes back at least ten years. In a Doonesbury strip from about 2000, when Mike's company isn't able to make payroll, he tells his daughter everybody's working for stock options now. "Do you know what stock options are?" "Sure! They're like lottery tickets, right?" "Shh!"
And just ironic that right at this moment the news about FlightCaster acquisition appear higher on the HN home page :)
I prefer to look at it this way, I'm taking an area where I think the current solutions are lacking and creating a solution was gives value both in terms of time and money saved. Yes as a side effect I can charge decent money for a product which generates more money in savings and extra profit than it costs, but amount of money isn't the real motivation.
I'd much rather work on something that fits this criteria than the so called "cool" webapps.
I'd much rather work on something that fits this criteria than the so called "cool" webapps.
Something to keep in mind in the B2B market is you can charge a lot. Do your research and find out how much time your software will save the company and price your solution closer to that than what it costs you to produce and support. You'll never get a consumer to pay $1,000/m for your web app, but if you can save a company 25 hours a month they're getting a steal.
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".
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".
"Money or the ability to make it doesn't impress anybody around here. " -- Mark Zuckerberg (the social network)
Making money may not be the primary goal of these apps. I for one have been working on a few things that probably will not make me money but are great experience, are teaching me a lot and hopefully will give me a little notoriety for the day I build my first money maker.
> If making money is the objective, I suggest going with the market-first approach
That's one way to do it, but not the only one. For example, it's not how Apple designs products -- their design criterion is whatever Jobs likes.
That's one way to do it, but not the only one. For example, it's not how Apple designs products -- their design criterion is whatever Jobs likes.
I think this is pretty naive. Apple's products, for the most part, are very successful. Either Steve Jobs is just extraordinarily average or they do quite a bit of market research. In fact, one of Apple's first hires was a guy who specialized in collecting data from user-testing and figuring out how to make applications better fit how they were used in the real world.
No disrespect at all to the author, but when I see advice on how to do something I always ask. "What have you done that proves that your advice works?"
If this came from Paul Graham, I would probably sit up and take notice but here, meh.
Still the blog is well written and the advice is worth a try if you are wired that way.
If this came from Paul Graham, I would probably sit up and take notice but here, meh.
Still the blog is well written and the advice is worth a try if you are wired that way.
> If this came from Paul Graham, I would probably sit up and take notice but here, meh.
Right, because all wisdom in the startup scene flows from those that have made millions during the .com boom.
Really, people like Paras are running start-ups today and are making money today, not 10 years ago, and even if Paul Graham is a very smart and capable person if it came to picking someones brain about running a start-up today I'm pretty sure that there is value to be found with both parties rather than just with those that succeeded in the past.
> Still the blog is well written and the advice is worth a try if you are wired that way.
So, you disagree with yourself?
If you're running a start-up you should take your advice where ever you find it and weigh it according to the rules of applicability to your situation, no matter what the source. You can even learn a lot from failures, no point in limiting your input to just the success stories.
Right, because all wisdom in the startup scene flows from those that have made millions during the .com boom.
Really, people like Paras are running start-ups today and are making money today, not 10 years ago, and even if Paul Graham is a very smart and capable person if it came to picking someones brain about running a start-up today I'm pretty sure that there is value to be found with both parties rather than just with those that succeeded in the past.
> Still the blog is well written and the advice is worth a try if you are wired that way.
So, you disagree with yourself?
If you're running a start-up you should take your advice where ever you find it and weigh it according to the rules of applicability to your situation, no matter what the source. You can even learn a lot from failures, no point in limiting your input to just the success stories.
This is not total theory. I run a startup http://visualwebsiteoptimizer.com -- I can't tell you how much money it makes, but it does support a small team full time.
Reading his blog, you get a sense that he has gone back and forth on the idea of web apps as startups. Which is perfectly alright because only close-minded people never change their mind.
He's the guy behind http://visualwebsiteoptimizer.com
He's the guy behind http://visualwebsiteoptimizer.com
1/10 isn't bad odds. After your fifth app, you should have pretty good odds.
Doing a startup already takes a lot of motivation. It's significantly harder if you're working on something that you're not passionate about.
(Note: I don't disagree at all with the author. I just want to point out that there are downsides to this approach as well.)