Michael Gracie

Meanwhile, give me your kingdom, and I’ll show you yet another ad

Ashkan Karbasfrooshan gave a few good reasons why most startups clinging to what seems like the one and only business model, advertising, will soon hit the skids. The guy used to be an ad salesman - fair enough.

Meanwhile, Dan Frommer toots Tumblr’s new business model, which just so happens to be…no wait…why don’t you guess…uh…advertising? I’m pretty certain you guessed right.

Are there really that many advertisers ready and willing to throw money at what seems like a never ending and limitlessly growing supply of ad inventory? And on sites whose content is also limitless (and free), and which, when combined with their userbase, reflects so little intent to purchase?

The Techdirt folks champion the concept of giving away goods of infinite supply in exchange for goods of a finite nature (latest example here). Seems to me internet advertising might just be reaching that unlimited availability point.

Mr. Frommer says:

There’s a big future in distributed storage and computing, and Amazon (AMZN) is on the leading edge. Nimble startups benefit any time they can focus more on building their companies than building their server infrastructure.

I’ll add that some of the aforementioned companies suffering don’t have discernible revenue models (i.e. they are “working towards scale!”). It would seem that having to rely on cheap third party storage services might put a monkey wrench in that plan, at least every now and then.

Meanwhile, Markus Frind, who runs the highly profitable PlentyOfFish dating site on a quarter rack of servers (i.e. “scaling the bank account”), notes that Facebook is making heavy capital investments and coming up heavily cash flow negative as a result.

Where’s the happy median? Or has someone already patented it ?

To be filed under “Fred Wilson’s Words of Wisdom“…

Look for someone who is a roll up your sleeves person who likes to engage with the other parts of the business. Look for someone who has been in a startup with growing pains before. Look for someone who can work nights and weekends. And be willing to pay them well. Because they’ll save you way more than they’ll cost you if they are good.

Quite possibly one of the most overlooked parts of building the C-level team (especially in tech, where CEOs and CTOs rule). And, that last sentence is one that most people can’t quite ever get their heads around.

People are still hurting from the tech market bubble of the late ’90s, and they have since moved on to real estate. This is a good thing - the average Joe didn’t really understand what they were investing in (and I am not sure they do now either). They cannot be held solely to blame - it was the wide-open IPO market that gave them access to those tech investments in the first place. Not any more.
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Depends on who is holding the purse strings.

World governments might be trying to dip their hands into the venture capital pie, or (more likely) they just don’t have a clue what they are talking about. What politico really does? The end result will be that they screw something up.
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AT Kearney recently completed a study where they found top executives at manufacturers, software companies, and IT services firms were determined to concentrate on nurturing existing product lines, rather than invest in new technology development. In Poll: U.S. has conservative tack on innovation, they say AT Kearney found roughly 90% of executives were concerned about “falling behind”, but were doing little about it. If that isn’t a tech entrepreneur’s call to arms, I don’t know what is.
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