

Scale first, monetize second - venturefizz
http://venturefizz.com/blog/scale-first-monetize-second

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michael_dorfman
_"[T]he ultimate revenue model may surprise you. as the product develops and
evolves and your community grows, the revenue model is likely to reveal itself
in an entirely new way."_

Or fail to materialize altogether. Remember the dot-com bust?

"Scale first, monetize second" can be a recipe for disaster. (It can also work
well, but that doesn't make it a general-purpose rule.)

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zaidf
What happened in the bust was they achieved neither revenue nor traffic scale.
The only thing the founders scaled was VC money. That's the ultimate disaster.

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spidaman
I'll grant that monetizing _advertising_ without scale may be futile. However,
the flip side of this is that monetizing too late shapes a company into a VC
addict, always pushing the fund raising lever for another scale pellet. Few
media sites make it at all, hoping they can scale their way to viability. At a
certain point, entrepreneurs need to tell VC's to get out of the way with
their the-first-hit-is-free scale advice.

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abyssknight
Okay, sure, if you have a ton of funding and love throwing money away, then
this is a _great_ plan.

Scalability can be bought, but not without cold hard cash. A decent product
and related revenue model has to be built.

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jcnnghm
Of course a VC doesn't want you to monetize too quickly, they want the company
to be huge, but only after the founders holdings are fully diluted. The
average technical founder is taken advantage of in a major way by the average
venture capitalist under the guise of the status quo.

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tjic
rebuttal: "premature optimization is the root of all evil" -- Knuth

Why bother making something scale before you know whether there is demand or
profit?

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idlewords
In the context of the author's comments, you're scaling to meet demand, and
delaying experiments with profit. Unless you're serving the bot community,
it's hard to imagine how you would scale without demand.

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copernicus
Just so we're clear, lose money on every user, and try to acquire more users
as fast as possible?

I work in the trading business, and in the trading business there's a running
joke -- we'll lose money on every trade but make it up on volume! I didn't
know people actually practiced such a strategy.

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pkaler
This is exactly counter to Mark Pincus' advice. You want to monetize to be
able to control your company. <http://www.youtube.com/watch?v=S7YaVVpK1G4>

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rwhitman
How many perfectly viable web properties have failed because they decided they
were going to scale to 1MM uniques before they monetized and ran out of cash?
A lot.

I've seen my share. I won't ever buy into this hype again. You don't open a
grocery store without a cash register, why start a website without a revenue
plan?

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hyperbovine
Monetize is the dumbest word. Just write profit.

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tjic
"Monetize" != "create profit"

"Monetize" == "create revenue".

You can monetize a free service by charging $1 for it, suddenly start bringing
in $1 mill/year ... and still be profit negative because you're spending $2
mill/year on engineering.

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dustingetz
going from $0 to $1M is a hell of a lot harder than going from $1M to $2M.
even though you're profit negative, if you got that far, you're 95% of the way
there.

