wschroter

You're assuming that people are willing to pay for your product up front for 12 months. If your price point is so small that an annual subscription is under $20, then it doesn't really make sense to charge monthly. I was speaking mainly for higher priced items.

Strange that no one is ever commended for preventing a failure, only attacked when one occurs.

that's exactly the answer I was looking for. Thank you.

$10 - $30 yearly. Of course if I worked at a company that used this (like a sales organization) I would probably have a whole ton of licenses.

I would definitely agree that there is a time and a place to debt-spend your way to profitability.

But consider the fact that some companies, even once they have hit the ball out of the park with thier original goal, still have no way to be profitable doing it.

At some point YouTube becomes a public service charity, not a business.

Lots of people want YouTube and it is on track to lose nearly $500 million this year. The fact that Google bought it doesn't mean they've created a business.

Build something people want. That's not good enough.

Build something people will pay for. That should imply enough want and will keep you around long enough to keep providing it.

I always notice people seem to read this book and assume that it's an instructional manual on how to live. It's just making points about the fundamentals of power.

I think it's a travesty that he was beaten down so bad by the negativity that he had to leave in the first place. This wasn't a vacation, it was a retreat - for the wrong reasons.

I love how people confuse "selling to Google" with a viable business.

Just because you sell the company (YouTube) doesn't mean the business was successful. It just means you've handed the loss to another company.

The reality is that the Web is so big now that you can start smaller firms for next to nothing in lots of niche markets. That doesn't mean VC is broken, it just means that smaller firms can exist without it. You're not going to start Amazon or NetFlix without follow-on capital. You can start a Web gadget company that makes $50k just fine though.

Agreed. Part of what I'm wondering is how viable the venture model is when the amount of revenue a category can generate gets quickly reduced from a free competitor that can operate at a fraction of the cost.

That's why I mentioned PlentOfFish. Probably not the best example, but if they are doing $10m as one of the leaders in the category, that doesn't spell a great future for others in the classified dating model. There are only so many of those major categories (like jobs, autos, dating) available.

The other trend is that advertising just doesn't pay the bills, even in mass amounts. I'm familiar with a handful of private companies that are doing millions of uniques per month and can't even pay a modest staff and support cost to stay afloat. The idea in the past was that with enough traffic the ad dollars would pay for free, but even that's not entirely working.

Revenue

It's true about those who are endlessly fueled by creating something - that doesn't change. You might not do it for money, but I'm not sure that really matters.

I sold my first company in 1997 and am launching my 10th in January. It never gets old.

This is a very familiar path among hyper growth companies - the point where the expense of growth outstrips their ability to convert to revenue. As long as the site keeps growing and adding users, they will continue to have a strong ability to feed the beast with more raised capital. I mean really - how many other companies are growing like they are? Especially in this market. They should have no problems at all getting access to more capital.

I'm just not seeing the ad dollars add up. I know of sites doing millions of uniques per month that can barely earn enough in Adsense (not the best model) to pay the cost of servers and rent. At all of the sites that I've run (Go BIG Network, Swapalease.com, GotCast.com, etc.) the ad revenues are always an afterthought. If we had to survive on those $$ alone we would be screwed.

This whole line of thinking is great for companies as a whole. If it forces more companies to be more responsible and efficient with capital, I don't see a problem.

Not really the point when discussing the investor market. If companies don't have quick exits, the typical venture investor can't make their fund operate.

That said, I do believe building a company that creates value on the basis of selling a profitable product is all that matters.

Why not just give the $700b to healthy banks so that they can lend to businesses and credit worthy consumers?

If we have $700b to give, why use it to buy up toxic debt? I understand wanting to keep the markets moving, so why not address the problem there?

At Swapalease we tried different offer combinations on our payment page including price ranges, price/offer packages, and free trials. Pretty much every price and feature combination you could think of. The point was that we needed to actually put those offers out there in order to understand what the market was truly ready for. When we ran surveys we basically got "we want to pay nothing". If we had gone off that feedback alone, we would have had a completely unrealistic idea of what the true price points would be. Instead we settled on $99 because we found that when an ACTUAL customer (not a survey responder) went to post their vehicle, that was the price point that had the highest take rate.

In regard to HOW we did it, we simply posted the pricing on the payment page. Prior to the payment page you only had to list your year/make/model to start your listing. We then tracked the number of people who went to the FIRST page (year/make/model) versus the number of people who went to the payment page (where the offer was presented) and got a sense for what offers had the highest conversion.

If you put in your year/make/model the idea is that you have interest. So theoretically the same person interested in listing their vehicle for free and the one listing for $500 are going to click to the next page. If we had presented price on the first page we would not have known whether users were bailing on the price or their intent.

I'll stick with my gallardo and continental gt. nothing compares to listening to a v10/12 rip the road apart! although admittedly, I do miss a stick shift.

Why is it so hard to figure out that certain executives command a certain pay? If Wamu paid less, they wouldn't get the guy they are looking for. It's supply and demand. There are a certain number of top executives when it comes to these searches. Just like top athletes or actors. It's not like these Boards are arbitrarily picking someone from the mail room and giving them $19m.

This is great - can you drop me an email at wschroter at yahoo so I can follow-up?

If you'd be willing to share more details, pls email me wschroter at yahoo

It's not about why startups are failing - it's about understanding exactly what happens to you personally when they do. When I talk to a lot of people about starting a company, they tend to be freaked out about "losing everything". I try to explain to them that it's rarely as bad as they think (the downside). Everyone I know that's "failed" has recovered in some way. But my data set is limited, so I'm reaching out to get other's viewpoints.

I've read a whole bunch of postmortems on TC and FoundRead that were great case studies on the biz side, but I wanted to get more info about how the entreps personally dealt with the companies. My experience is that failure is never nearly as bad as you would think, but I would imagine others have had very different experiences.

Thanks for the mentions of Go BIG (this is Wil, the founder) but keep in mind you can pick up some other broader searches through indeed.com and simplyhired.com - most of the sites like ours do syndicate those feeds. Also, check out 37signals and techcrunch for their job feeds which are often pretty sweet and pretty targeted. Not sure if you're looking strictly for tech startups. Some people want tech jobs in non-tech companies (imagine that!)

People undervalue $1 million (or similar numbers) incredibly. It doesn't mean you don't have to work, but it pays for just about all of the things you end up working the first 15 years of your life for - house, furniture, "stuff". Once you've purchased all that crap, any money you make over and above that actually seems like a lot more because it's not going toward buying couches and bedroom sets.

I made my first million when I was 22, and though it didn't keep me from working ever again, it basically paid for all of the things I needed. Anything beyond that has been incremental gains. It's a lifestyle changing amount of money.

I've had a few stories I've tracked on the TC effect.

Recently they wrote about my company, GotCast.com, and we had about the same reaction as Paul saw.

Before that I wrote a story for TC about a company in the photo sharing space (Jan of last year) and they had significantly more traffic from it.

I think anymore the spike is a lot less noticeable than people give it credit for.

all great points - can you drop me a msg at wschroter@yahoo.com so I can ask some specific questions?

Thanks NoBS - do you remember any of the sites you tapped to get some of the original legal terms?

edw - the idea for the article is that there is a fair amount of legwork you can do yourself to avoid legal fees without wasting a ton of your time either. For example, it takes less than 20 minutes to incorporate your biz at MyCorporation.com and it's only about $300. I've done 3 companies through them. So I'm just trying to provide entrepreneurs with some quick/easy resources.