I was speaking on a panel at Library House’s excellent MediaTech yesterday, where the great and the good of technology and media gathered to debate, network and pitch furiously at London’s iMax Cinema. Jolly good it was too and if you didn’t manage to go, make a note in your diary for next year.
One of the keynotes was given by Reid Hoffman, Founder, Chairman and President of LinkedIn, as well as angel investor and business thinker. LinkedIn is really the only worthwhile online business networking site, as far as I’m concerned.
Reid was there to talk primarily about how to start a successful business with a theory that was a little unconventional, but made a lot of sense to me. Although you could hear some of the more herd-like VCs (as opposed to the leaders) gulping nervously, muttering about blasphemy and wondering what intelligent question they could ask potential investees if the “yes-but-what’s-the-business-model?” one wasn’t allowed in Reid’s brave new world.
Reid’s main point was that startups shouldn’t worry about how to make revenue, but focus on customer acquisition. Specifically, how to scale the business to get its first 1 million and then 10 million users. He argued that if you couldn’t figure out a way to get there, the revenue model was irrelevant anyway. And if you could, you’d find a way to make money.
The advantage of this is that you’re in a much better position to work out how to monetise when the business already exists and you have an intimate knowledge of it. And many new revenue models would exist a few years later that would be invented by you and the market in the meantime. Therefore, actually proscribing at this stage what would drive revenues was nothing short of well…naive, I guess, to paraphrase him.
It makes a lot of sense to me, but I imagine quite a few VCs would take issue with him. But it’s a model that LinkedIn has successfully followed, supported by their top notch investors (declaration one of them is Sequoia Capital, who also funded AdMob), so it can be done with the right vision and the right visionary funding partners.
Reid also threw away a comment that sounds obvious, but is very astute - the best advertising looks like content. Hmmm.
“the best advertising looks like content”
bingo and about time more people started saying this. my generation (21 year old) ignore ads completely. they are irrelevant. what we enjoy is content whether that be in the form of video or well written articles. we don’t see the ads anymore, but we hear see and read what people are talking about.
that is much more powerful. thanks to a plugin i will not mention, my internet experiance looks absolutely wonderful. no more ads and that is how i like to keep it. am i hurting businesses whose number one line of revenue is advertising? sure. that is their fault for not being innovative enough to get my money.
i proudly give flickr 25 dollars a year and when i sent an email to viemo asking them if they are going to offer premium accounts (i really dig their HD player) they told me to wait as they’re planning it out.
boring.
i am the anomaly, not the norm however. i haven’t paid for content for over half a decade. i download all the shows i like and then watch them on my cellphone during my commute. i guess i’m living the lifestyle of a typical asian, but i’m just a regular american living in finland.