

Ask HN: Examples where you make something people want, but are unable to profit? - apollo

I'm asking this to test the YC mantra "make something people want."
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philwelch
Any non-excludable goods, which includes public goods (which are also non-
rivalrous) are very difficult to profit from. These include lighthouses, laws,
national defense, clean air and water, a sustainable population of fish and
game, and so forth.

I say "very difficult" because search engines, for example, are non-rivalrous
and non-excludable in practice. They are "public goods". The trick is, access
to the attentions of and data generated by search engine users _is_
excludable, and this is the good that Google actually sells. But any sort of
non-excludable good from which your consumers cannot generate an excludable
good you can sell for others would be unprofitable.

Programming languages (mentioned by another post) are another good example of
a public good: they are non-rivalrous, and while they may be excludable as
long as you sell the only compiler/interpreter/runtime and sue everyone else
who writes a different compiler/interpreter/runtime, in practice no one will
pay for a programming language anymore so you have to make it non-excludable
for it to even exist in the outside world. Likewise, Google is probably
excludable in the sense that they can set up a paywall before you use it, but
in practice Google has chosen to make the search engine non-excludable and
it's hard to see how a paywalled search engine would work (though I won't rule
it out as a possibility).

~~~
zackham
Paywalled search can definitely work, given that you are searching an
exclusive data set. Look to Lexis Nexis.

~~~
ericd
But when a non-paywalled alternative comes about (see Google Law), it
threatens to eat its lunch.

I think people view for-pay information brokerage as unfair, unless it comes
with service. If it's something they know costs the other party 0 marginal
cost to provide, people start resenting them, which causes the paywalled
service to hurt doubly hard when a free alternative comes about - even if they
follow to free, people might stay away out of spite.

~~~
patio11
_I think people view for-pay information brokerage as unfair, unless it comes
with service. If it's something they know costs the other party 0 marginal
cost to provide, people start resenting them_

I think you are projecting your own personal views, or possibly views which
are non-negligible in your social circle of tech-rich cash-poor twenty
something males, onto the population at large. Empirically, people will pay
for LOTS of things that have zero marginal cost. A short list: airplane
tickets, gym memberships, list of bankruptcy sales in Chicago (my dad is a
real estate agent and has had stacks of this weekly publication for as long as
I can remember -- that info is _expensive_ and worth every penny), and WoW.

~~~
ericd
I may be, but I don't think most people think of those things you list as
having 0 marginal cost, as they're tangible goods or services (although the
listings one is a bit sketchy, I think a lot of people view being charged a
lot for access to that sort of info as highway robbery, despite its very real
value). The cost of information has been anchored at $0 repeatedly over the
past decade, and we now use that reference point when deciding the monetary
value of new info.

I think I was probably off the mark in my post. It's likely not the marginal
cost they're considering, it's likely just that $0 is the new reference cost
for info in many people's minds.

------
mcav
"Make something people want" is primarily valuable as a negative test:

You probably _won't_ profit if you make something people _don't_ want.

But making something people _want_ doesn't correlate nearly as well with
whether or not your product is commercially viable.

~~~
MicahWedemeyer
And there are oh so many ways to totally botch the execution. You can make the
best thing in the world and still fail because you couldn't market it and no
one ever knew that it existed.

~~~
samuraicatpizza
And even if you do market well, the timing may be completely off or you may
have bad luck.

------
grinich
Medicine for the 3rd world. It's a big problem.

~~~
tlb
Can you point to someone who developed a useful medicine for 3rd-world
diseases and failed to make money?

Few diseases are confined to only extremely poor areas. Medicines against
malaria, for example, are a robust business. If you developed a good vaccine,
you could make a lot of money selling it in Brazil, China, India, and other
developing countries. The reason there is no vaccine isn't because there's no
money to be made, but people have actually tried pretty hard and been unable
to develop vaccines that aren't as risky as the disease itself.

~~~
neilk
The point is that most customers in the Third World are not able to afford the
price point that makes such medicines profitable.

The workaround since 2000-01 or so has been differential pricing or licensing
for the Third World. But this took decades to get agreements for that to
happen.

Here's a good page about the situation with HIV drugs.
<http://www.avert.org/generic.htm>

------
tc
Programming languages and tools.

There are some counter-examples (e.g. Franz, LispWorks), but I think it's best
to just consider this sort of work a labor of love.

~~~
DenisM
Visual Studio is quite expensive and yet it is selling very well to enterprise
markets.

The trick is to pick the right customers.

~~~
finiteloop
I think you meant "The trick is to own the platform and then sell the tools
you must use to develop on it at an absurdly high price."

~~~
Zak
Which platform is that? Windows? .NET? It's perfectly possible to target both
without using Visual Studio. Microsoft has somehow[0] convinced people that
using VS makes their lives easier. Lots of people pay for IntelliJ too. I
think the trick here is to get people hooked on languages that have a lot of
boilerplate and therefore require a powerful IDE to be usable, then sell
people the IDE.

[0]Based on personal conversations with individual VS users, it actually
appears that VS is what many developers want or think they want, not just
something forced on them by management.

------
chrischen
I give out free $100 dollar bills. People want it, I don't profit.

~~~
fizx
"Make", not give.

~~~
staunch
A quibble really. I could _make_ diamond rings that are worth $1000 and sell
them for a $10. _Lots_ of people would want them.

There are a million easy ways to make $0.10 by spending $1.00

~~~
wan23
Or you could sell them for $1100 and make a profit. The original question
wasn't about ways to throw away money.

~~~
chrischen
Then people wouldn't want them anymore.

------
apsurd
We really need to remember that "make something people want" is a specific
piece of advice relative to building a product. We get all giddy about this
advice because as programmers, that's what we love to do; _build things_. But
a business depends on many many more things than just your product. I'd argue
that a company's product is, at max, 30% of what matters to the profit-
generating system as a whole.

So to answer your question: it is irrelevant. And I encourage you to separate
"product" from "profit". Because if you want to make profits, you need to
master business and marketing. Making products is for those programming guys.
The great thing about HN, is that we think we can do both ... and we can! -
Just remember that they are different hats for a reason.

=)

------
staunch
What I've found is that there's almost always _some_ people that want any
particular thing. The two _really big_ questions are 1) How many of them are
there? 2) Can you make money off them?

#1 is much tougher. If you're in a niche inside a niche inside a niche and you
end up with 10 paying customers sending you $20/mo it's technically "working",
but too small to be worth it.

#2 is easier. The situation Twitter is in. They have tons of users and now
it's purely a matter of ingenuity to come up with a way to profit in a big
way.

------
nico
Twitter

~~~
drp
I very strongly doubt that they will be unable to profit. They've just managed
to rack up so much funding without doing so that they haven't made it a short
time priority yet. If they had no master plan for huge profitability only
idiot VCs would continue investing.

~~~
johnrob
If anyone has an idea for how they will make money, they are keeping them to
themselves. I haven't heard of a single plausible idea.

~~~
javery
Twitter will make money using premium accounts, selling access to the stream,
selling their own premium clients, and selling targeted advertising.

------
vaksel
It depends on your definition of profit. You can make something people want
and end up with a business that makes $10K profit, but you won't be quitting
your job to run that business.

~~~
ewjordan
If that's $10K profit after paying your employees and yourself reasonable
salaries, then you're off to a sustainable start, and should stick it out.
You're probably still growing, and if your marginal costs are not too high,
any further growth should be almost pure profit.

If it's $10K without paying yourself, then you've got some work to do, but if
you can live lean off your savings, you may still be able to improve the
situation to the point where the business is sustainable or better.

If it's $10K before you pay your employees, find a new business, this one's
not going to happen.

------
slashedzero
Fully on demand cable television. So many people tell me "I'd love it if I
could just pay per channel and forget about the other channels."

That got me thinking it may be something to exploit. Not so, with
infrastructure costs swallowing up so much of the potential profits. People
will just have to deal with all the channels they end up paying for. So, it's
either the internet or bust if you don't want to play the cable game.

------
swolchok
<http://mbusreloaded.com/umbus> \-- several hundred people use it every day,
all of them cheap/lazy college students who aren't going to pay for the
privilege. The value of advertising on the system seems to be barely greater
than costs (a few tens of dollars per month) and the current advertiser is
behind on payments.

------
ephermata
Jury is still out, but free/freemium music services look hard. (People don't
seem to want subscription services.) lala sold allegedly because they weren't
getting to profitability fast enough, imeem struggled, and Pandora needed an
act of the United States Congress to deal with sharp increases in streaming
royalties.

------
jeromec
A huge thing to note, even with a large number of unprofitable cases, is not
that the YC mantra is flawed, but more likely systems may not yet be in place
to facilitate profitability. For example, if there were an awesome
micropayment solution I'll bet a lot of currently unprofitable sites could
find profitability.

~~~
ericd
Agreed - I think the minimum viable visa charge (due to high minimum fee) and
the increased abandonment rate due to the hassle of using your CC is holding a
lot of things back.

I think this is a very necessary startup, but one that's going to be very
difficult to pull off well, and will require serious cash.

~~~
ephermata
There are a lot of broken bodies on the micropayment road. Millicent &
Peppercoin come to mind to start. Maybe the world has changed since then, but
if you were doing a company on micropayments and came to me, I'd want a clear
answer as to what you would do that everyone else did not.

------
noonespecial
Making something people want : easy.

Making something people want enough to pay what it costs to create it : hard.

------
zitterbewegung
4chan is probably the best example of this. Loads of people want an image
board but it isn't profitable.

~~~
drp
It's skirting profitability though. From <http://www.4chan.org/news/?all#95>

"We've long since shed the notion of recouping costs through donations, and
instead turned to ad revenue for covering operating expenditures. Our entry
into the wild and not-so-wonderful world of advertising has been mixed. We've
added more ad positions to the site over the years to offset rising overhead
and been bounced around between so many ad networks and account managers that
I'd be hard pressed to list them all. But we've succeeded—4chan is still here,
after all."

------
fnid
Amazon is losing $2 on each e-book. Sometimes forward thinking innovations
take a while to get profitable. Sometimes the market is too small. There may
be 5 people who want it, but it costs more than they can afford.

~~~
eagleal
Discussed in: <http://news.ycombinator.com/item?id=979905>

------
wmf
The CrunchPad? Ignoring the legal problems, it sounded like people would buy
it at cost but with any markup it would be too expensive.

------
byrneseyeview
It's a tautology (how do you know they want it? They're willing to buy it!),
but a useful one.

------
iterationx
When the cost of production exceeds the market value you are unable to profit.

------
ryanwaggoner
I think a better motto is "Make something people want to pay for."

~~~
quizbiz
The problem with that is that people will always want to pay less.

------
Mathnerd314
Free software. (but only if you confuse the two meanings of free)

------
teyc
General Motors

Investment Banks

Railways

Subprime lenders

~~~
tlb
All these things have historically made huge amounts of money. While there are
some very visible recent failures, the average return on all these industries
over their lifetimes has been very good.

------
sw
Charles Goodyear

------
physcab
Music

~~~
dualogy
Some companies and people profit from it and have figured out ways to do it,
so... disagreed.

------
zackattack
Wikipedia needs 7mm in donations but only has raised like 2mm so far.

Hiphopgoblin had a bunch of people who proclaimed their love for the site, but
I doubt any one of them would have paid cash for it. Maybe I could have cooked
up some sort of new media advertising plan had I realized enough traffic, but
I decided to abandon..

People's love is a revealed preference when they vote with their wallets.

