Situation: A company sells personalized content as well as a tool kit. The long-term plan is to monetize storage of personalized content. When they speak to venture capitalists, the VCs advise them to focus on just building their user base and not to worry about revenue. What would you do? Where should you focus – eyeballs or dollars?
Advice from the CEOs:
- Take advice from venture capitalists with a grain of salt. Remember that their game is to fund companies that they like incrementally, taking a greater share of ownership of the company with each increment in funding. The more you lack revenue, the more you’re dependent upon them.
- Gain traction by offering free content with up-sell opportunities for premium access.
- The give-away strategy is a great model to build your initial user audience. Consider micropayment options for special features, content storage, and so forth.
- Going slow and steady may not be the right model for this space. Company growth for a web-based platform is different from the typical bootstrap model.
- It’s hard to get good advice for viral marketing opportunities from CEOs who have bootstrapped their companies. Look for other input. Seek the advice of CEOs who have been successful in the viral online marketing space and learn as much as you can about their business models.
- Gaming is another opportunity – premium or virtual world sales.