Sunday, March 16, 2008

Markets and Audiences

There's a feeling among wantrepreneurs that they need to reach the widest audience possible. They don't have the knowledge to do anything particularly interesting, so they're led to the latest trend (web 2.0) and its business model. The problem with web 2.0 and advertising is that it's a low-margin business, so not surprisingly, there haven't been many IPOs, except notably, Google. Low margin, broad appeal: that's the Google way.

The problem is they're missing whole markets and over-saturating one. Web 2.0 isn't producing Microsofts, Apples, or Ciscos (or even Broadcoms, LSI Logics, or Seagates). That's not to say there aren't startups doing innovative things in limited markets, but the majority are so focused on one segment that they're missing better opportunities.

A coworker told me that the money isn't in the company doing something cool, technically, it's in the company with good sales applying technology to problems outside of Silicon Valley. If broad appeal and the internet was the recipe for profit, how did WebVan fail?

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