idea, customer-development, finance, iterative-developmentI have what I think is a great idea for a consulting practice. It meets the following criteria, which tells me it can be something I will follow through with:
There is only one problem: As currently conceived, there is no room in it for making money.
The reason is that I don’t think the target audience would be willing to pay for it. I am reasonably confident they would accept my services for free. But I suspect that if I try charging, they will turn away. It’s not anything essential that they can’t live without, and they’ve managed just fine so far without me around.
My question is, Where do I go from here?
Should I pursue this? Is there any value in giving this a go if common sense dictates that profits would be elusive? Or am I doing/thinking about this totally wrong?
I have already done something similar in the past (although in a different subject domain). It was a small one-man nonprofit, something I was (and still am) passionate about. But it never was intended to, and never did, generate income. Only some very minor expenses. I am starting to wonder if I have it what it takes to engage in a successful for-profit entrepreneurial activity.
Headline: 10 years later, Twitter still isn’t close to making money.
Were you happy with the impact the first project?
The rule of thumb for an entrepreneur is to “look for a problem you can solve and monetize the solution” but this also leads to a ton of flaky ideas, startups (most of them) with no chance of success, and in some cases, predatory monetization models where the product may actually cause harm. If your only motivation is money, wasting other people’s on an untenable concept, preying on weakness, or causing harm with unsafe products is not a concern, except in the sense of legal liability.
You sound like someone who wants to make a positive impact, regardless of financial returns. Since most startups won’t make money, one way of looking at it is that you’re already ahead of the game. At the end of the day, you’ll have produced something useful, where the failed startups will have merely lost their investment capital.
Linus Torvalds might be someone to look at. Although I think he has a fairly high networth today, there is no indication his motives with Linux were financial.
John D. Rockefeller may be worth looking at as well. There is a famous story about him giving away free lamps so people would have a need for the lamp oil he sold. Where a market didn’t exist, he’d created it. The difference between that and a software product is that you don’t have the manufacturing overhead, so your “lamps” don’t cost anything to mass-produce. Is it possible that if people start using your product and come to rely on it, there may be some way to gently move toward monetization?
Finally, my experience in big tech is that sometimes companies acquire smaller companies not for their technology or revenues, but for their market-share. If your application is useful and you can get millions of people using it, someone may become interested in acquiring your company to gain your customer base.
I’m not advising you one way or the other, but merely attempting to provide some perspective.
Another key question would be: Will pursuing this project hurt me? This could come in the form of losing money, missing out on other potential opportunities, or creating liability with no gain.
Many entrepreneurs give away content for free, as a way of establishing a positive reputation / brand, and also establishing business relationships with many people. Then, they take it a step further and offer another related product or service for a price. If there is some other related thing that people would pay for, you could add this as the “second step” of your business. Most people would only use the free service. But some portion of them would also pay for the additional service or product.
If you pursue this model, I would recommend limiting the amount of time you spend offering the free service.
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