Revenue Models and Startups
The post is a gist of the speech by Jay Jamison discussed in his blog leaving the flock
At an early stage all startups are usually advised to focus on building a great product/service and getting an audience. And then revenue will flow automatically. How right is this concept? Is it advisable not to think about the revenue too early in the life of a startup?
It is extremely important to focus on your idea and building something people want, but at the same time thinking about the revenue model (at least a bit) at an early stage is recommended as well. Don’t divert your attention from the main goal since a great product is the lifeline of a startup. But it is also advisable to at least have a revenue model which you can always change it later on. Don’t rush into monetizing though, monetize when it makes sense.
A startup can have various kinds of business models, the popular ones being;
Figure it Out Later/ Ads (Google, Twitter)
Market Maker (Paypal, Ebay)
Freemium or Subscription (Animoto, Salesforce.com)
Virtual Goods (Facebook applications)
Price Per Use or Copy (MS Office)
Another important suggestion for startups is – know your industry model inside out. It is very important to analyze the industry. Ask tons of questions and connect with customers and market. Build a belief that your revenue model will work in the industry model.
I’ll talk about my thoughts on types of revenue models, a sort of revenue model 101. Nothing too revolutionary here, but hopefully a useful primer if you’ve not thought through a business model before
