Comment by dirkstoop | Hacker News Reader

Comment by dirkstoop | Hacker News Reader

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I'd say the more sure-fire way is: “Create something useful” -> “Charge for it”.

Now there's always the risk that nobody wants what you made (see fendale's comment), but lets assume for a sec that that's hard either way. Here's a very dry analysis of the path to money for both:

Advertising model:

- Create something useful

- Find an audience

- Find advertisers

- Get advertisers to pay you

Product model:

- Create something useful

- Find an audience

- Get audience to pay you

That's at least one less step in the ‘product model’. You can even argue that to properly execute the advertising model you'll actually need one more step in between: “Create an ad placement strategy” (“Create” as in “design and implement” in all cases here).

Getting money from the people who experience the value of the “useful thing” sounds a lot more direct (and more efficient, which correlates to a better return) than getting the people who value the attention of the people who value the “useful thing” to pay you.

I don't have any first-hand experience with the ad-supported model, but I seriously question whether it's a/the sure-fire way of making money online.

Problem is, people expect things to be free. By restricting yourself only to people willing to pay money, you've cut out most of the internet population. You might be restricting yourself to a small business.

There's also a heap of other reasons... for example, if you create X, and sell it to users, you're only selling one thing. By advertising other peoples products, you can be selling 1,000 different things. The chances of success are vastly increased. Also, if you sell directly, your users are likely only to purchase once from you. If you run advertising, they are more likely to generate continuous revenue for you, from multiple products.

> Problem is, people expect things to be free.

Businesses don't.

> By restricting yourself only to people willing to pay money, you've cut out most of the internet population.

No, you've cut out freeloaders who expect something for nothing, people you generally don't want anyway. This isn't cutting people out, it's filtering out bad prospects. People who want stuff free are the worst customers, I'd much prefer those who are willing to pay for something they find valuable to them. You can avoid a lot of scaling problems by only focusing on paying customers and there's no shortage of paying customers if you build something of real value.

If you want to do business to business, then sure. Personally I don't particularly enjoy that.

Also the point about 'avoiding scaling problems' is sort of funny. You can certainly avoid scaling problems if you don't try and grow big.

Growing big and growing profitable are entirely different things. If you get profitable without getting big you do gain the benefit of not being forced to scale on borrowed money. The goal of business isn't to be big, it's to make money.

Getting profitable is easy. It's the getting big bit which is hard.

The fact is, it's often easier especially online, to solve the hard problem (get big) first. Once you've done that getting profitable is a walk in the park.

> Getting profitable is easy. It's the getting big bit which is hard.

Exactly my point, and since the point of most business is to make money that should be the obvious first goal. Getting big is for dreamers, it's a lottery, getting profitable is the sensible goal. Get big later, or risk failing chasing wild dreams.

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