Creating value for a few versus value for a lot of people
Posted by Mukund Mohan at 4/1/2008 10:12 PM and is filed under uncategorized 
I am purposely coming to his thread late. Figured this way, I'll avoid being the yet another techmeme link. Jason Calacanis posted a while ago about how twitter can be a billion dollars.
"An absolute idiot with 10-20M users can make a ton of money. So, get to tens of millions of users and forget about money."
Linkedin (a service I use because most of my business contacts keep sending me requests to connect) is such a service with 10 Million users.
I believe recruiters get a huge amount of value from Linkedin, so there's a small population of their 10+ Million users who get some value by "paying" for premium services.
So back to Jason's point, if you get 10 Million users, game over - trouble is, even at that number if your value is to a fraction of your 10 Million, then its really a house of cards is it not?
"An absolute idiot with 10-20M users can make a ton of money. So, get to tens of millions of users and forget about money."
Linkedin (a service I use because most of my business contacts keep sending me requests to connect) is such a service with 10 Million users.
I believe recruiters get a huge amount of value from Linkedin, so there's a small population of their 10+ Million users who get some value by "paying" for premium services.
So back to Jason's point, if you get 10 Million users, game over - trouble is, even at that number if your value is to a fraction of your 10 Million, then its really a house of cards is it not?
At the 10M mark, it's not about creating value for all 10M users in the same way. By that point, you have to enable sub-communities to form on your site. LinkedIn Groups do this for me, though I'm not a recruiter
Personally, I'd love to have the 10M user problem! I don't need a $10M investment... just 10M people to give me $1
Reply to this
Mukund - I'm with you on this one. Numbers don't mean anything if there's little value for the masses. The reason being that low value = no stickiness. If you don't have stickiness, you can't sell ads or sponsorships (or memberships for that matter.)
Regarding LinkedIn, I've had a similar experience i.e. lots of folks connect with me but other than serving as a good online resume (and thus helpful for recruiters,) I've derived little to no value from it. I don't mind keeping it around but definitely spend more time investing in Twitter and Facebook because of the reciprocal value delivered.
Best,
Aaron (@astrout)
Reply to this
Jason
that's the fallacy of the web. They told me the same thing about yahoo email. They have 204+ Million users, if only they could get them to pay $1/month. In fact at yahoo's numbers they only needed 10% of them to pay.
I have to agree with what Aaron says.
Reply to this
Not sure if I fully agree. First of all, I can't believe that LinkedIn is worthless to the masses. There is an observable effect that the conversation rate of an offline transaction can be higher when coupled with an online experience. My guess is that job hunters, consultants looking for business, any kind of offline transaction of human services is getting a bit of a conversion lift from LinkedIn, and by promoting that lift, they have the opportunity to charge people (either on a flat rate basis or on a per transaction basis) to capitalize on that conversion lift.
It is true that the user count, is in general, a very poor indicated of the communal value of a site. One needs to look at active users who repeatedly log in and who repeatedly transact in some sort of well-understood way.
My complaint with the folks at LinkedIn is that they haven't spent time understanding the transactional use cases enough and are instead, trying to make it some kind of homepage/destination site.
In the case of purely interactive sites vs. transaction sites (i.e. AOL/Yahoo vs. an eBay/LinkedIn/Amazon), although there is not transactive value being created, it may be the case that the viewthrough itself is a form of value generation for a 3rd party, namely an advertiser. So although the 204+ M users of Yahoo mail may not be willing to a $1/month, at the scale they have, they can get a load of advertisers to foot the bill. The challenge with the advertising model is to create those interactive experiences that actually lead to a meaningful viewthrough.
So in general, I would expand the view of "value creation" on the internet - admittedly not to the extent that it is often extended - that is, on the basis of # of users - but I do think that there are many creative opportunities to help facilitate transactions and/or create interactive experiences, which can yield a business opportunity for the mediator.
Reply to this
Murthy
thanks for the long yet smart observation. I think what I am learning is that after you do get the "users" you better give back some value based on their usage is what you are recommending. Good point.
Reply to this
Here's a way I used Linked In to work for me. I run a US based outsourcing customer service center. My local paper (yes, I still scan it) featured a couple of companies that provide unique services for fliers. I went to their website, noticed one company did not provide 24/365 service but their competition did. I went to LI, found their founders, sent an InMail & was in the door 72 hours later.
I'll be surprised if i don't get business from this. I sent unsolicited In Mails to some "suspects." Once in awhile it gets me a response.
Allow me to ask a question. I'm new to all this web 2.0 stuff and looking for ways to promote my company and myself. I'm looking for communities who are seeking service that I can provide. In reality, I talking about selling...but I have real content (case studies, white papers, etc that I know small to medium size businesses would find educational. I am willing to give (provide knowledge) before I get...leads. Any suggestions? Thanks.
Reply to this
Larry
Will address your question in a separate post.
Great of you to ask though. Its a question that begs creating a "conversation".
Reply to this