Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Richard Luck
I admit it. I love the Sears catalog.
Surely Santa received the Sears catalog, too, we reasoned. Wouldn’t a page number simply be easier?
The child in me died a little in the early ‘90’s when Searsdiscontinued its annual “Wishbook” in large format. Sure, as an adult I understood the financials behind thedecision. In a couple years’ time,Amazon would prove their point. But emotionally, the “Wishbook”meant something separate from its physical form.
Fast-forward to 2010. I still love pawing through aSears catalog. Though now I tendto spend my time with the admittedly paltry 250-page ToolCatalog, visions of table saws and biscuit joiners dancing in my head. Last weekend, however, all ofthat changed. As I thumbed throughthe catalog, postcard-sized ads for everything from auto insurance to floristsflittered out from between the pages and fell to the floor. I felt crestfallen, admittedly, likeI’d lost an old friend.
Sears selling advertising to strategic partners, thenplacing those ads in its catalogs, may seem like a smart financial move – andmaybe it’s generating some much-needed cash flow in a particularly tougheconomy—but in this consumer’s mind it did little more than tarnish a greatbrand.
Looking for Love inall the Wrong Places
There is a curious behavioral pattern among entrepreneurs inthe web world that is wholly unlike any other industry. It goes roughly something like this:
- Come up with some wild-assed idea after downinga few pints of micro-brew with a buddy in Belltown.
- Code like a monkey on meth over a long weekendand launch the site a mere 48 to 72 hours after first having the vision.
- Generate some buzz in the local blogosphere, monitor stats continuously, andwatch user count grow into the (tens of) thousands after just a few weeks ofsleepless nights and several cases of Red Bull.
- Get some Angel or VC interest, blow through somecash, then suddenly realize you’ve got to figure out how to actually make moneyoff of this idea—and fast!
- As a stop-gap, throwa whole bunch of advertising up on your site to monetize the eyeballs you’ve already attracted.
- Scratch your head and wonder like mad why theuser growth ain’t what it used to be.
- Decide that since you now have revenue comingin, you don’t really want to address that problem if it means negativelyimpacting your page views.
Sound familiar?
Now I don’t mean to single DevShed out in my above linkillustrating on-site advertising gone seriously wrong. There are thousands of sites out therethat are more offensive. ButDevShed’s homepage clearly makes my point. And it’s made all the worse by the fact that there once wasa time when they had one of the best (if not the best) online reference sites around for techies. It was an easy to navigate site with aclean (though decidedly Web 1.0) look. Now? Idon’t know. I started using serverfault because I simply found iteasier to read.
Figure Out YourRevenue Model on Day One
As entrepreneurs, it’s easy for us to get married toideas. We love the vision. We see the future and it is ours tomold. But it takes the pragmatistin us to recognize that if we can’t fund that idea, it just isn’t going tohappen according to plan.
If your idea is the next Google, Twitter or Facebook kind ofidea, then, yes, you will need to burn someone else’s cash as you build tomassive scale and in essence become “too big to fail”. Your sheer size (once reached) willgenerate its own revenue stream as others clamor for access to your searchresults, firehose, or network.
But if you’re like the rest of us, you really should thinkseriously about the need to build revenue generation into every meaningful userinteraction you can from day one.
Groupon gets a piece ofthe action on every single transactionit facilitates—and Google is now offering $5B. Twilio makes apenny every time a developer routes a call through their network and VCs arejumping over one another to invest in the company. Wikipedia is giving away the farm and every single year it’sfounder and CEOmust publicly shill for donations.
I don’t decry Wikipedia their appropriate place in webhistory, or the importance of their mission. I just think a revenue generatingbusiness model makes more sense. And it keeps me, as a CEO, from having to bring out the proverbial redbucket and bell every time we want to do something meaningful as acompany.
Unfortunately, DevShed forewent their opportunity to pivottowards a revenue-generating business model years ago. Maybe they never had theopportunity. It is incrediblydifficult to make money off of staff-generated content, as a growing number of magazine publisherswill tell you.
As for Sears… I’ve decided to give them another chance. Last night I introduced my two youngest sons to the Little Wishbook, but only afterthoroughly removing all of the advertising inserts. Some childhood memories need to be carefullyprotected, after all.
Richard Luck is co-founder and CEO of Loudlever, a company which helps magazinepublishers lower their content acquisition costs while getting a handle ontheir copyright, licensing, and royalty obligations.
He’s built too many web sites based upon drunken brightideas and has decided this time around will be different.
