8 "frat-boy" business ideas
iwillteachyoutoberich.com
iwillteachyoutoberich.com
I don't think he's gotten to the root of the problem, though. The root of the problem is not certain categories of ideas. It's a half-baked way of looking at the world.
As long as you avoid that, there are good ideas to be had in several of the categories he describes. For example, I'm sure there will be huge new businesses that depend mainly on advertising. Is Google going to be the last, ever? And if “Flickr + ___” is a recipe for failure, it wasn't always. YouTube's goal was to be the Flickr of video, and that worked out well for them.
It looks to me like most monumental successes are created one of two ways: Out of love, or out of messing around. Savvy, experienced entrepreneurs and investors can make some bucks just "doing business", but when you haven't got the experience, love or curiosity is the fuel that keeps you going.
For better or worse, Google defines the baseline in online advertising. New companies can't compete on ubiquity, so their service has to be superior in how it targets specific demographics. Assuming that succeeds, they then have to then figure out how to leverage that limited dominance into something broader.
It's certainly possible, but it's also certainly more difficult than it was ten years ago.
The standard startup ad-based model is: offer content, show ads. This is not Google's model.
Google's model is rather: build up a massive 3rd-party network of ad displays, and then broker ads onto this ginormous network.
Google is not a ad-displayer, they're an ad-broker. Unless you want to tackle things much the same way, you won't be replicating the success of Google.
Anyone who has enough people wanting to advertise with them can create an affiliate network. Creating that initial demand strikes me as much more difficult.
IMHO it's more difficult to create the affiliate network by virtue of the fact that to be profitable, your affiliate network needs to be obscenely large.
Search ads have much more clicks per page view because they are better targeted. Google generated 67% of their revenues in Q4 2008 from their own site and just 30% from the AdSense network.
I think you are mistaken. You are taking ideas from the old magazine world of advertising. I don't think demographics, appealing to a certain demographic or any such thing. Google's success has nothing to do with this. In fact, in many ways it is the opposite of magazine advertising.
The normal ad model is distribute a magazine & plaster ads on it or create an event & plaster sponsors on it. The ad has nothing to do with the thing the ad is on. Google's model is different (for search anyway).
For some businesses, being found on Google means business. They are willing to pay for Google to do what they do anyway, send searchers to web pages. They're genius is that their ads are not ads.
Google targets people who are searching for a keyword. In some cases, these may be people who are looking to buy a product. However, people looking to hire (say) expert C++ programmers can do better than advertising against a keyword, because searching for that term implies nothing about skill or experience. In this particular case, something like LinkedIn would be a much more valuable advertising resource, because it has much more relevant information about the audience.
Google has an extremely clever advertising model. In many cases it is much more efficient and effective than traditional print and television advertisements. But it's still advertising.
They are certainly monetising, but I think it is a mistake toi think of it in those terms. Google is more similar to classifieds, service directories or even ebay then it is to the traditional advertising model.
I did a variation of this my freshman year, by actually buying about $10k of books from students on campus and then selling them on Amazon. We made about $3k all told... I guess the author is right that it didn't "really succeed" and become a huge business, but I definitely learned a ton. (And notably, Chegg is in this space and seems to be doing well enough to get Kleiner Perkins to join their $25m series B.)
THERE IS NO MONEY IN T-SHIRTS.
Nonsense. There's a lot of competition, but plenty of people are making tons of money.
Anything where you plan to make your money exclusively from ads
Bashing ad-supported business seems to be popular these days, but somehow those people are overlooking the fact that Google made $21B last year doing just this. Making significant money from ads requires getting to scale, but if you have the drive and the right mindset, getting there isn't as hard as you might think.
From their 2008 Q4 earnings report ( http://investor.google.com/releases/2008Q4_google_earnings.h... ), Google-owned sites generated $3.81B while partner sites generated $1.69B.
I think the act of comparing the amount Google makes from AdWords to AdSense is moot -- Both of these channels are very successful. Both of these numbers end with a capital "B".
So question: Do I become an ad broker and take on Google or simply utilize Google to display ads on my property and make some coin?
At this point, I don't care how much Google is making off of me as a percentage, but I do care how much money I actually do put in my own pocket.
I think it is still possible too succeed with coffeehouses, but one shouldn't be romantic about it...
The statistic is that most new businesses will not be going concerns X years after inception. This is true, but it does not indicate failure. I find this to be clarifying: if someone asked you for advice, saying (with wavering voice) "I'm considering taking a... job... where this company, like, pays me money every other week... is this safe?!", would you say "Pfft, most jobs fail"? Because most twentysomethings who start a job today will not be employed at the same job, by the same company, in 5 years.
My second "real job" was with the aforementioned technology incubator. I worked there three years, made decent money and learned a lot, and had a better opportunity when it came to contract renegotiation, so I took it. If I had been a startup at the same incubator, that would have put me in the "fail" column. Is there any sanity in that definition of fail? (Give me another few months and I'll be failing my way forward out of the better opportunity, hopefully.)
So when I start a new company that pays me more the next year, my first business "closed" - that means it's not going. You could say it "failed", but really, I learned the lessons, made a tiny bit of coin, and then promoted myself into the next business. I know lots of entrepreneurs who leapfrog themselves the same way - and similarly, lots of small companies get bought and integrated or stripmined by a bigger company. This is actually a hard part of being a businessman - that's your baby, y'know? - but if you're ready to move on, it's certainly not a failure.
Paul Graham sold Viaweb. Viaweb company is no longer a going concern. It didn't fail by any stretch of imagination, but will be included as a "failure" in these silly "most small businesses don't exist (fail) within five years" statistics.
[1] Numbers might be off a bit, my memory's kind of hazy. I remember calculating at one point that I was making something like $2.20 an hour, maybe after six months or so. $5,500 net split with my partner after six months? I'm smiling now, but it's kind of ugly to remember those days...
For example, let's say you hang out your shingle as a self-employed software consultant today. Two years and 3 successful projects from now, one of your clients offers you enough money to convince you to go full time for them. You, accordingly, close your business. While that is counted as a "failure" by most metrics, that doesn't look like a failure to me. (Losing all your money and being reduced to bankruptcy, now I'll agree that certainly looks like a failure, but nobody tracks that.)
Also, he seems under the fallacious impression that better ideas are somehow easier to implement. Sorry, pal - good ideas are just as hard to pull off as bad ideas.
Speaking in the abstract, of course. In reality difficulty is relative, because we all have different resources to draw on.
The t-shirt idea that he mentions, for instance, is a good example of an idea that is neither good nor bad. Basing a business around a handful of t-shirts is obviously a bad move, but a t-shirt business can certainly be created - and in fact that has been done many times already. There's nothing inherently bad about the idea.
You could say that building a search engine in 1996 is an very difficult idea - lots of hard work, little chance of success, lots of established competitors, and requires a rare breakthrough, incredible amounts of work marketing the new engine and getting all sorts of larger companies to use it, etc, etc. Does that make it a bad idea? Hardly.
Ideas are only a small component of success - execution is far more important. If the aforementioned frat boy are willing to give it their all and are competent enough, they can likely make any of these ideas succeed. Even if they fail, it's at least a great learning experience. I say go frat boys, go.
That quote is both very true and very wrong. It's true that you can get into entrepreneurship with very idealistic values that drive you to ignore some of the more important financial aspects of running a business, and wrong in that if you don't do it for at least some type of love then you are probably going to fail for lack of passion.
Hence the lack of analysis on if the business has been tried before, has current competitors, or what your costs per product would be comparatively.
On the other hand, if you don't price out the lifestyle you want (in terms of money and time), then you have no metric to determine whether a given business will be viable for you.
Those are just ways to describe an idea, not necessarily the idea itself. People do this to quickly convey their message or business; it's straight out of the excellent book Made to Stick.
* These ideas aren't destined to fail. Look at chegg. * Just because it's been done before, doesn't mean you can't. ie- busted tees. This goes back to our is there room for another photo sharing site discussion from last week.
Here's why I don't particularly agee with the article, despite Ramit being a badass:
*It focuses on the business types MORE than it focuses on why they won't work. It doesn't focus on things like: uniqueness, execution, design, segmenting growth at first to niches,etc.
"What are other people unwilling or unable to do?"
That's your play. After social networking has been firmly established, everyone wants to Lord over the next Facebook. "Yeah, I could see myself running a social networking empire" they say. Yeah, you and 150,000 other people. Good luck with that.
Things other people are unable to do - because you're better, or think "outside the box", play on. Things other people are unwilling to do - sanitation, rehab, WYSIWYG website creators for people who are bad with computers - play on. T-shirts, coffeeshops, airlines, social networks? Might want to go back to the drawing board there...
This is an illogical argument: "NO BOOK EXCHANGE HAS EVER REALLY SUCCEEDED. I HATE TO CRUSH DREAMS BUT PLEASE FORGET ABOUT THIS."
So if they don't really have the will to do it, then yes, one should discourage them from doing it. For their own good.
People with will will ignore the advice anyway. (Will will will!)
That said, the desire to build a book exchange is like a nerd disease.