<rant> To get to 1 million users for an internet product in the US, you need to convince one in 260 people to come on board (and keep them coming back), as there are 260M internet users in the US.
In China, you're looking at a 400:1 ratio. But in the UK, you need to convince almost one in 60. France is the same. Germany is slightly better. In Australia, you need to one in 13 people. So, catch the bus to work this morning, and look around. If you can't see how you can profitably get 6 of those passengers - and of course extrapolate that over every bus, in every city, and then throw in the cars and the rest of it - to use your platform, you're not going to make it to a million users. While there are exceptions - and they deserve tremendous respect for overcoming the odds - I think you can only make a true B2C web play work (and I'm not talking about marketplaces/exchanges, I'm talking advertising based revenue models) in one of four cities in the world: San Fran, Shanghai, Mumbai (or perhaps Bangalore, I'm not super familiar with the entrepreneurial and capital scene in India) and perhaps New York. Everyone else is at a massive disadvantage. Platforms for distribution like app stores (and the monetisation opportunities they provide through up front purchase, in app purchase, etc) are changing the economics of doing things in tech for consumers (they can of course also be ad supported, but the global homogenous marketplace means it doesn't matter as much where you are; just ask Tapulous<http://www.theage.com.au/technology/technology-news/aussie-in-silicon-valley-strikes-gold-after-disney-buyout-20100702-zs1g.html> and Firemint<http://www.startupsmart.com.au/growth/2011-05-04/ea-snaps-up-melbourne-tech-start-up-firemint.html>), but if you're looking at a B2C or a P2P product, and you're doing it from Down Under, you're going to need luck, and a lot of it. </rant> From: silicon-beach-australia@googlegroups.com [mailto:silicon-beach-australia@googlegroups.com] On Behalf Of Nick Gonios Sent: Thursday, 9 June 2011 6:21 AM To: silicon-beach-australia@googlegroups.com Subject: Re: [SiliconBeach] Re: Is social networking commercially viable in Australia? Agree Mick. At 3eep/SportsPassion, we understood the challenges of a deminishing ad CPM model and positioned our efforts towards a sponsorship based approach. This is well understood in the sports market. Yet, this approach ultimately limited our ability to scale revenues against usage because the deals were usually fixed in terms of $. Anyway, key point is that it's very difficult to commercialise these communities and do not underestimate the efforts required to do so. Only way to go is to have a community pay you a subscription fee for the functional service you provide them. Prove you are adding value and then you're ready to scale. Nick Gonios On Wed, Jun 8, 2011 at 11:42 PM, Mick Liubinskas (Pollenizer) <bigm...@gmail.com<mailto:bigm...@gmail.com>> wrote: Nick knows my thoughts on Freemium. :-) http://www.pollenizer.com/premiree-more-premium-less-free/ My main point is that it's a hell of a risk aiming for an advertising model, unless you're just nailing great content like Problogger and Neerav. You have to build it, grow it, be very patient (typically or you do a big distribution deal that costs bucks) and then you find out if you have a business. Also, most ad businesses typicaly completely underestimate what they will make. They assume that it's targetted and that it's contextual so they'll get really high CPM's. But it never works out as good as you thought and as you scale it always gets worse. 1 million impressions at 50c CPM (which is not bad at scale) is $500. Which covers hosting, and vegemite sandwiches for a month. At that CPM you need 2 billion impressions to make a million dollars (can someone check my maths, I was betterer at other things at skool). Of course, it depends on about 10,000 things and we're probably all wrong so go for it and prove us to be shmucks. Mick "Banner Ad" Liubinskas On Jun 8, 8:31 am, Nick Gonios <nickgon...@gmail.com<mailto:nickgon...@gmail.com>> wrote: > +2 from me. > > I have enough experience in this locally as we went about building a local > sports social network as early as 2006! > > We would say to people 'we are myspace for team sports!' that's how early on > we were onto the next wave of building a social layer over the web. Some of > our main challenges was trying to find the person ready to use our service > and continue to use it. The Sports market is very sports code oriented and a > lot of people do not appreciate this when they first enter this market. I > still see it today when I speak with people who have entered this market > locally. The fundamentals have not changed. > > Building for platform scale just for Australia is extremely difficult in this > part of the world and therefore an ad supported model is too hard to even > consider. > > A freemium model makes more sense in Phase 1 and then consider ad/sponsor > revenues in Phase 2. In order to build a freemium model you need to make > sure you're providing a functionality simple yet valuable service that a > community actually needs. > > This are my learnings and views. > > Regards > > Nick Gonios > 3eep co-founder (and now heavily focused on transaction revenue ventures) > > On 08/06/2011, at 7:22 AM, Niki Scevak > <niki.sce...@gmail.com<mailto:niki.sce...@gmail.com>> wrote: > > > +1 to what Alan said. > > > Also, here is another take on online dating/social networking that has > > an interesting biz model (adwords for people): > >http://www.wired.co.uk/magazine/archive/2011/05/features/sexual-network. > > > It's nothing against social networks, the criteria is against > > businesses that require a large audience (top 3-5) to become relevant > > to brand/reach based advertisers. The market there requires an ever > > huge audience to be relevant and then the cpms are crashing all the > > time. With all that said, for the winners it's still a good business. > > > On Jun 7, 12:20 am, alan jones > > <alan.jo...@gmail.com<mailto:alan.jo...@gmail.com>> wrote: > >> Just because Startmate prefers not to invest in ad revenue-focused > >> businesses doesn't mean you shouldn't try and build an ad-revenue- > >> focused startup - there are other sources of funding out there! At > >> Startmate we're looking for a particular subset of startups and > >> startup founders because we think those are the people and companies > >> we can add the most value to (and hence get the most return on > >> investment from.) > > >> As others have said, ad revenue is not the only revenue source for a > >> social network. But for a social network to be successfully funded by > >> ad revenue, you need to > > >> - Identify a community that marketers want to reach, that is not well > >> served by other ad networks; > >> - Build a social network that this community wants to use > >> - Find a way to get them all to trial and then keep using it > >> - Build a critical mass of audience in that community that sustains > >> and grows itself > >> - Find a way to place advertising in the community that doesn't upset > >> the community's users > > >> You don't have to solve all those problems to be considered successful > >> - for instance, many would argue that Twitter hasn't yet delivered an > >> advertising solution that marketers need, nor placed advertising media > >> its users are comfortable with. But if I were Twitter I wouldn't be > >> resting easy just yet, either. > > >> Hope that helps, > > >> - alan jones > >> (Startmate investor and > >> mentor)www.doingwords.com<http://www.doingwords.com> > > >> On Jun 5, 9:50 pm, Joshua Partogi > >> <jpart...@fanstago.com<mailto:jpart...@fanstago.com>> wrote: > > >>> Hi, > > >>> One of the criteria for submitting application to Startmate is that it > >>> must be a business that does not depend its revenue from advertising. > >>> From what I can see, social networking is one type of business where > >>> it gets its revenue from advertising. Looking at that criteria, does > >>> that mean businesses like social networking is not a viable business > >>> or won't succeed in Australia? Is there any example of social > >>> networking that come from Australia that did not succeed in tapping > >>> the market? What are the pitfall if we want to start a social > >>> networking in Australia? > > >>> Thank you for the insights and assistance. > > >>> Kind regards, > >>> Joshua. > > >>> -- > >>> @jpartogi > > > -- > > You received this message because you are subscribed to the Silicon Beach > > Australia mailing list. > > > Guidelines on > > discussion:http://groups.google.com/group/silicon-beach-australia/msg/351e183e13... > > > No lurkers! It is expected that you introduce yourself. > > > To post to this group, send email to > > silicon-beach-australia@googlegroups.com<mailto:silicon-beach-australia@googlegroups.com> > > To unsubscribe from this group, send email to > > silicon-beach-australia+unsubscr...@googlegroups.com<mailto:silicon-beach-australia%2bunsubscr...@googlegroups.com> > > For more options, visit this group at > >http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Guidelines on discussion: http://groups.google.com/group/silicon-beach-australia/msg/351e183e1303508d?hl=en%3Fhl%3Den No lurkers! It is expected that you introduce yourself. To post to this group, send email to silicon-beach-australia@googlegroups.com<mailto:silicon-beach-australia@googlegroups.com> To unsubscribe from this group, send email to silicon-beach-australia+unsubscr...@googlegroups.com<mailto:silicon-beach-australia%2bunsubscr...@googlegroups.com> For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en -- Nick Gonios e: nickgon...@gmail.com<mailto:nickgon...@gmail.com> m: 0416 239 111 skype: nickgonios twitter: @nickgonios linkedin: http://www.linkedin.com/in/nickgonios -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Guidelines on discussion: http://groups.google.com/group/silicon-beach-australia/msg/351e183e1303508d?hl=en%3Fhl%3Den No lurkers! It is expected that you introduce yourself. To post to this group, send email to silicon-beach-australia@googlegroups.com To unsubscribe from this group, send email to silicon-beach-australia+unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Guidelines on discussion: http://groups.google.com/group/silicon-beach-australia/msg/351e183e1303508d?hl=en%3Fhl%3Den No lurkers! It is expected that you introduce yourself. To post to this group, send email to silicon-beach-australia@googlegroups.com To unsubscribe from this group, send email to silicon-beach-australia+unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en
