The Strategic Value of Complements

http://www.nicholasgcarr.com/digital_renderings/archives/the_strategic_value.shtml

by raju • 18 years ago

14 4 18 years ago

colortone2• 18 years ago

Killer article

This is a must read for all software startups...we gotta get away from thinking about "what kind of advertisers would buy on our service" and start thinking about serving as a direct complement to those advertisers' core business, and then doing deals around sponsorship/investment.

My $0.02

bryanlanders• 18 years ago

Aren't strategic partnerships a major tool for startups? What have freemium and all-free models done to the "competitive weapon" of undercutting competitor pricing? How can you access the risk of complementary endeavors?

konsl• 18 years ago

You can still undercut competitor pricing with freemium; with an all-free model, your "competitive weapon" is to out innovate and maximize the potential for value creation.

colortone2• 18 years ago

Depends on the nature of the "strategic partnership", but the stuff that I'm trying to push is really more directed at existing businesses, not startups. Many companies have partnerships with VC firms or their own VC fund or internal "labs" that invest real money in complements. Ultimately, much of the early-stage VC game seems to be about investing in complements for existing businesses and then selling the complement to that business once the risk has been reduced to a reasonable level.

So to clarify, I'm trying to say two things: 1. when designing a business model, don't think in terms of selling advertising (i.e. selling out your users), think in terms of "creating value for someone with discretionary budget to send your way"

2. most companies, especially their marketing departments, should be more active in investing in complementary infosoftwaretech.

The Strategic Value of Complements

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