Defining The Obvious

18/06/2008 In revenue, social media by Tim { }

So I’ve been curious lately about how web apps generate revenue. Ultimately lights have to stay on - therefore there must be some form of cash flow. Articles like “Web 2.0 fails to produce cash” bemoan the ability of Web 2.0 sites to be profitable.

“Many members of the Web 2.0 generation of internet companies have so far produced little in the way of revenue, despite bringing about some significant changes in online behaviour, according to some of the entrepreneurs and financiers behind the movement.”

I find it interesting that the focus is on the money and technology. This is only the tip of the iceberg of the noise about how W2.0 has failed to bring in the cash. So this triggered the thought to question what makes the difference between the successful and failed web app conversion - aside from a little luck.

Here’s what I’ve found to be the magic keys to successful conversion:

You can’t suck at it. There is no magic fix for your Idea 2.0 to take off like wildfire if it doesn’t work. Copycatting an existing player means you will have to bring the A-Team, A-Game and A-Idea (thanks to Plurk for the inspiration). Fortunately, if your idea is revolutionary there is some leeway for struggling at first - but if you can’t get the traction at first it will be an uphill battle to bring the people back.

You can’t be fake. Social media is unforgiving when the information hits the fan. Likewise - even bad news can be beneficial if sculpted (addressed) in time. There are plenty of examples of good and bad transparency between companies and their customers and how that affected the bottom line. Amazon is a great example of how they cleverly handled a customer and turned it into a win for the brand.

You can’t be lazy. The biggest misconception of any money making scheme is that easy = lazy. For some reason web app success seems to be plagued with this thought process - that once I build it the money will flow in. This is a business, in business (taking a note from outside the web) you have to work to stay on top. With that being said - yes the web can make technology easier to deliver your dream but you still have to put the work in to make it a success.

You can’t be cheap. The deathblow of any project is to be concerned with cutting corners and doing it cheap. The bottom line is to set your priorities and definition of success and do everything in your power to make it happen - even if it means going over a little budget. If you are successful that budgeting session will have been just a blip on the radar. This doesn’t mean blow the budget on a crazy design staff and throw change at your underlying architecture. Sites like Craigslist and Del.icio.us don’t have ground breaking layouts - but their service works and it works really well - mostly due in part to their development staff and designers who understand the brand and purpose of the site. Even when looking to fill staff positions 37signals makes the point to understand the basics - which I take to mean - understand the purpose and vision.

So this has been a list of “can’t” do - so what is the make or break “can” do?

BE ORIGINIAL. That doesn’t mean that you have to go invent a way to harness underwater volcano energy (although that might be a good way to get the world’s first underwater volcano energy powered car). Being original means - taking the core idea and converting it to be a usable, viable - DESIRED item that causes intrigue. Whether it be a service or a product - unless there is a desire - conversion is darn near impossible.

Finally, this whole bit means nothing if you maintain your old ways of looking at the numbers. Social apps and media experiences are more about marketing than advertising. The age of “social” doesn’t mean just using new technology to push a message, rather it means using new technology to enhance, increase and outreach in people-to-people relationships.