GigaOM with a post today that I must have started about 10 times and never managed to get it in a cohesive way.
Startups today are so product-centric, which is important, that they forego thinking about making money. This is accentuated by the fact that VCs are throwing so much money that they don’t have to think about making any.
The Swiss author pointed out that the biggest problem is that these days, most entrepreneurial decisions are seen through one lens: product (and product functionality).
“There is a very pervasive product-centric thinking,” he said. “There needs to be more of a business-model-centric approach.” Osterwalder isn’t saying that you shouldn’t have a product or obsess about making it awesome. What he is saying is that as a startup, it behooves you to be aware of business model options, even if the answers aren’t obvious right away.
Good point! Now apply that to Twitter: having followed the company for a long time, I do know that “business model” is a relatively new concept at the company. Had it been aware of its options from the early days, it would have imposed some limitations on its decisions.
For instance, “no advertising inside the Twitter stream” should have been spelled out loud and clear. If Twitter at some point thought of itself as a media network, then its business model option would have included controlling the front end(s) to the service. Instead, it didn’t do any of those things. One logical explanation is that the service itself was evolving as it went along.
Twitter isn’t alone in this dilemma. I have seen many startups that have focused on developing awesome products but spend little or no energy on thinking through their business models. It is understandable. The features and product evolution are the fun part of the startup, and thinking about possible ways to make money can be soul numbing.
If you’re building something that people probably won’t pay you for, it’s time to consider advertising in new ways, not just a banner ad.