Fred Wilson’s post today, a precursor post to his Monday series on revenue models, turned up a lot of food for thought. This one is Fred’s:
I strongly believe that entrepreneurs should pick one revenue model to start with and focus 100% on making that work before rolling out another one. It is very hard to execute two or more revenue models at the same time. Better to nail the first one before rolling out the second.
Another comment from Fred, which was picked up by commenter takingpitches:
[Fred] I am a fan of starting with the most native and easiest to execute revenue model first. Ideally it will be one that improves the user experience or at least in no way harms it.
[takingpitches] It’s the Hippocratic Oath of revenue models: First do no harm.
To the question how do you pick just one model and focus on it, awaldstein said:
I sound like a broken record on this already… but the challenging part is discovering the monetizable value, not the monetization model. Sure the model ain’t easy but unless you sell chairs or smoothies, you need to determine what has enough pull (or the pull is increased ) by the model. Charging is the fun part as long as you have something of value to charge for.
And to the question when do you expand beyond the initial model, Fred responded:
When you’ve nailed the first and its [sic] all execution at this point
Fred talked about the idea of an atomic unit for a product a long time ago and I wrote about that here. William Mougayar and awaldstein got into a further discussion:
[William] The best case scenario is when your “Atomic unit” is very monetizable and valuable at the same time. The tweet is twitter’s unit & they can monetize the heck out of it, in more than one way.
[Arnold] Hard goods or services are one thing. You sell something. Marketplaces bring the customers to you and their atomic unit is that transaction. Twitter/Facebook…media models. It’s clear but still not simple to find a smooth way. Most people either ignore or dislike sponsored adds [sic]. Media models are based on tolerance and work when the population is huge. Understanding the atomic unit is one thing, making a transaction a natural part of the process is not always clear especially in early stages. And sometimes the atomic unit is the razor not the blade!
If this post’s conversation is any indication, this series is going to be incredible!
Great selection of key points and comments. I LOVE this series for many reasons you and I have discussed in the past. I think the gem of the gems in the sequence is this: “the challenging part is discovering the monetizable value.”
It’s all easy on paper 🙂