In a post yesterday, Graeme Thickens reminds the blogeratti that they (I’m not yet sure I should include myself in that category, but I’m certainly guilty, too) “missed the point” in the debate about Alltop, Guy Kawasaki’s new blog aggregation site. While journalists, analysts, and bloggers argued about the value, audience, and innovation in this site, few if any of us talked about how Alltop makes money.
I put that question to Guy, as I always do with new entrepreneurs, when I first talked with him about the site. And I failed to mention it in my initial post. Not surprisingly, the business plan is simple and common: attract a lot of users, then deliver targeted advertising based on the content visitors read. Because of the broad base of topics covered at Alltop, the site has potential to connect a much broader range of advertisers and consumers. That content range allows Alltop to play in very niche markets without the expense of developing niche audiences. In affect, the breadth of coverage at Alltop appeals to the niches within us all.
So, that’s the business plan, “the point” we all forgot to mention. But while we’re on the topic of “the point,” it’s as good a time as any to make the point that “the point” is the reason any of us are at this thing at all. And that point is so often overlooked, particularly in this day of capital-efficient Web 2.0 software and services.
Too often, these new “products” rely on Business Plan 2.0: Do something cool, hope a lot of people like it, figure out if and how it makes money later.
And too often these days, the media – social and otherwise – that cover Web 2.0 “businesses” give them a pass on business model and viability. A media darling trumps a going concern.
While the blogosphere argued about the Alltop’s design, its audience, its founder’s resume, and even the cost to build the site, we failed to talk about its viability as a business.
(And by the way, when did cost become a measure of innovation? By that standard, the U.S. should have the most innovative government in the world and OS/2 should be the dominant operating system.)
It’s no wonder, then, that so many business people outside the echo chamber that the technology media can be, still scratch their heads about the investment and excitement that surrounds Web 2.0. With the exception of a couple phenomenal investments, there is little evidence that there are businesses among the mass of cute logos and I’d-like-to buy-a-vowel names.
It’s high time the social media covering Web 2.0 take up our responsibility to do more than just hype or pan new ideas. We also have to look for the business that lies behind the widget.