cabbagehead909 - 12:52 am on Aug 26, 2011 (gmt 0)
I'm stuck and need some insight please. What business models are working online for 2011 and beyond. I'm just not seeing much opportunity to build a real solid business right now, that can still be relevant in 10 years. Can someone please help shift my thinking?
Here's what I see:
1. Content Site - Sure, a little money can be made here and for the true guru, you can do rather well. The big problem here though, is you're 90% dependent on Google for your traffic,and probably even for your ads. That is not a healthy business model to have a single supplier and a single marketing channel, and particularly when they're (gulp!) the same company. So, this can be a nice marketing strategy or a way to other things (reputation building, seed money, etc) but I would not build a business like this, for fear of Google's next update or whatever.
2. Affiliate Marketing - I've seen first hand that affiliate programs are happy to have affiliates as incremental revenue in the short term, to learn their online marketing tactics, then erect more and more barriers to take back more and more market share from them. Meanwhile, the amount of online marketers out there is immense and the cost of advertising is rising daily. Where will the profit margins be in 2 more years, even on Facebook? And that's assuming that leaching off of another business was ever a viable long term business model. Again, this one is good for short term profits and seed money I suppose.
3. SaaS - The toast of Silicon Valley! Build your own hosted software solution that automates a service for someone, a la SEOMoz or RavenTools. Great idea, but it requires a lot more time and money investment than one would think. More importantly, every freaking idea I've come up with (and I've come up with a LOT), I've found at least 5 competitors out there for each, and more often than not, they have angel of VC funding. So how does a single guy compete? There are plenty of success stories on this one in places like Mixergy and Hacker News, but those are the stories of the 1 out of 100 that found a niche and established a defensible position before others caught on. What about the 99 out of 100 who (like most engineers) spent a ton of time and some money building a product, never marketed properly and never got traction? So is that a good model for business then? Not to mention, these are very easy for a larger business to come along and topple; just look at what Google+ is trying to do to Facebook. Now ask yourself what happens if Google comes after you and youre NOT Facebook.
3. Web Production Agency - I seriously contemplated this one thinking it better suites my personal appetite for risk. As I started researching competitors online buy typing things like "magento developers", I was confronted with 3 pages of results that all looked something like this "Magento developers from $18 and up". WTF?!?! Obviously this is outsourced labor and obviously I'm not. Perhaps I could even arbitrage that labor a bit since I know not everyone wants the outsourcing headaches of India, but geeze - the fact that its become THAT prominent is a SERIOUS under current to future profit margins ... isn't it? And besides, I can name two web production firms who've closed down near me in the past year. And I can't think of a single one I've seen hiring recently. Hmmm...
4. Internet Marketing Consulting - Okay, perhaps this one makes more sense? I see more success here. In fact, I saw BlueGlass announced on their blog they're "now accepting clients this month". Okay, perhaps the market is better here, if they've actually been turning people away. And I know marketing is inherently less likely to be outsourced than code ... BUT ... if we're talking about SEO and Facebook and mobile apps etc ... aren't we basically just talking about technical/tactical implementation, separate form strategy which is driven by the client? And if so, perhaps this is equally outsourced and will be in 5 more years? Perhaps the key here is establishing one's self as a high end strategy company - okay, I'll admit THAT seems possible. Be BlueGlass maybe?!?1
5. eCommerce - I attended InternetRetailer this year out of curiosity. But honestly, where's the opportunity in opening your own online store now, if you don't have your own unique product, or some unique sourcing angle? The ability to just source a common product (chairs, TVs, whatever) and sell it for a profit, should be completely extracted from the market by now, right? I'm sure the Amazon's of the world are eating the small guys lunch by now and bidding them out of PPC positions. And if they're not, its a matter of a year or two until they do ... again, unless you have a unique product or can source something unique.
This is an admittedly negative post, but I'm just calling it as I see it, and frankly I feel all the opportunity that I'm seeing that DOES exist, probably will be played out in another 2 years or so, with the quickness things are moving at. The irony is I was a total optimist and had more ideas to pursue than I had time, 5 years ago. But the market I believe has changed immensely since then. I see profound levels of competition, profound amounts of money chasing a relatively few opportunities. It seems every entrepreneur in the whole da** world is starting an online business now. Perhaps then i should be looking to open a restaurant or something instead. lol
So please tell me - is there a business model that makes sense to start investing in *today*? Meaning, you invest now and will have enough time to build and extract sufficient value to justify the effort, before the window is closed?