"Scale makes [business model] easy."
Adam Rifkin stashed this in Scaling
I'm regularly talking about how hard it is to be a founder in a startup.
So I chuckled when I read this line from BusinessInsider, pointing out that Tumblr has 38 million US users (up from 10 million a year ago):
So far in its life, Tumblr has not really tried to figure out how it's going to make money. This has been a smart decision. With the site scaling with users the way it is, Tumblr would be silly to limit its potential revenues with any actual numbers. Better to leave all that up to the imaginations of its backers.
If the Tumblr network continues to grow the way it is growing right now for the next couple years, it will suddenly be the size of Facebook – and able to sell ads, water, or anything almost, and make billions.
Scale makes that kind of thing easy.
Don't fool yourselves, entrepreneurs.
Starting a company is hard and scaling a company is hard:
Uh yeah... if scale made business model easy, wouldn't one of the numerous CEOs at Twitter have nailed it by now?
Twitter HAS nailed it, Joyce. PROMOTED TWEETS, baby!!
This reminds me of Fred Wilson in 2008:
"Some of the best web companies of our time (Google, YouTube, Skype, and Facebook) all launched without a business model and took their sweet time getting to one."
A year after he said that, all of the 2009 Twitter monetization experiments failed.
Scale doesn't make business model easy. Groupon has scale, but many still question their business model.
It's all quite difficult - both as a founder and as any early team member trying to build a large and profitable company. I think scaling is very hard, but if you have scale in attracting specific user behaviors and attention, you at least have solved one hard problem and that gives you more chances and opportunity to solve the profitability problem. Myspace is a good example of never quite cracking that (MOAR ADZ!!) but lord should one be so lucky to have that challenge?
It's helpful to remember that even Google's original business model didn't quite work:
Google AdWords launched in 2000. The initial version was a failure because it priced ads on a flat CPM model. Some keywords were overpriced and unaffordable, while others were sold inefficiently at too cheap of a price. In February of 2002, Google relaunched AdWords selling the ads in an auction similar to Overture's, but also adding ad clickthrough rate in as a factor in the ad rankings.
In other words, it took them years of experimenting to get it right.
Promoted tweets are increasingly ridiculous! Like WHEAT THINS had a promoted thing today, but they didn't even use the username "wheatthins"... it was like "crushthecrunch" or something you'd never associate with Wheat Thins! I'm agog with anticipation at what Twitter will push at me next.
This is the same WHEAT THINS that will give us a dollar if we LIKE the Wheat Thins Facebook Page.
Which suggests it's not Twitter who suggested that campaign to Wheat Thins. It's likely a Madison Avenue marketing brainstorm.
There's an old fake SNL ad (couldn't find it on youtube) that pitches a store that makes change. You bring in a dollar, they'll trade you four quarters. You bring in a dime, they'll trade you ten pennies. Someone asks how they make money and they reply, "Volume."