When an online consumer startup begins to develop a new product, for some time there's often an intense focus on the core product and less on the business model. Sometimes summarized as, if you have more than a 100 million users you will be able to figure out a way to monetize.
However, product design choices will impact the business model and vice versa. In terms of revenue opportunity, cost structure and capital needs. A company's capital needs directly impacts how much dilution the founders of a successful startup will have to endure. If the company isn't successful, high capital needs will force the company to turn off the lights sooner.
In my mind, many founders would be well served by thinking deeper and harder about the business and revenue model early in their companies' life. It would increase their likelihood of survival (and success) as well as the likelihood of keeping a large ownership stake in their companies.
No comments:
Post a Comment