Sunday, March 16, 2008

Creation and Capture

I once asked an experienced Silicon Valley angel investor/board member/management advisor how I should answer the how do you plan to make money question.

He told me to respond in three parts:

1. We are not going to focus right away on making money. We are going to focus on creating value for our users: giving them something they love.

2. We're also going to focus on growing our community. While the value we create will be what keeps people coming back to the site, we need to introduce people to our service and get them hooked, and we need to do that effectively and inexpensively (this is something for which we have some plans, but it's certainly something on which we're still looking for advice; I'll make it a post of its own someday).

3. If we pull together a community of users, engage it, and enable its growth, then we will be building an asset. We will find ways to capture the monetary value of that asset, but we will monetize only if the monetizing itself adds to the value we provide to our community.

My friend in Silicon Valley said that we should be committed to building a business, but we should be far more committed to the project's social and environmental mission.

I've posted about community and business models before in reference to Loic le Meur and Seesmic, but, this past Friday, Umair Haque brought it up and got forceful.

When you try and "monetize your users", you accept the almost obscene assumption that people are meant to be pimped out, sold to the highest bidder, resources to be slashed, burned, and exploited.

We'll keep talking about business model possibilities. And we'll keep discussing boring old money making tools like commission sales and advertising. But Umair is right: "when we figure out how to capture value, we must do it in a way that doesn't destroy any value we create."