Comments on: What Will We Do When Growth is No Longer the “In Thing” Anymore? (Web Startups)

By: christianbusch

christianbusch — Wed, 13 Aug 2008 12:18:19 +0000

Charles, good post and thoughts. I agree with you, quality and earnings will become more important than pure size over the next 12-18 months. That should also open up a lot of spaces where fast-growth operators currently grab market share without a real path to profit.

By: Steve

Steve — Fri, 01 Aug 2008 14:59:52 +0000

Not sure, but I think your arguments are valid only when predicated on existing technology. Perhaps you implied this yourself, in 5) Silver lining – that a game changer can appear at any time.
Interested?

By: chudson

chudson — Wed, 30 Jul 2008 15:16:11 +0000

Sure, go ahead and post the conversation – thanks!

By: gregboutin

gregboutin — Wed, 30 Jul 2008 10:52:17 +0000

Thanks Charles. Good discussion. I obviously agree with that clarification, what I'm disputing are the 2 original assumptions you base your point on:
1. “growth for growth's sake” carries less weight with investors nowadays or, quoting you, the “pay for growth” era is coming to a close. I'm interested in some backing facts here, because from my conversations it seems that investors are investing less because start-up costs are much lower, not b/c they became more picky, which they are hardly in a position to do given how much financing there is available today. The trend seems to be that entrepreneurs push the timing for getting VC funding further and further out. For early start-ups, I believe that traffic is still a good enough proxy for revenue that if you can prove exponential traffic, or qualified traffic, with a strong management team, VCists will fund you even if the path to revenue is fuzzy, which it always is at that stage. In other words: lots of traffic will get you funded, no matter what.
2. “a lot of the “interesting” land (top app position on Facebook, top web 2.0 application mindshare for the moment, top 500 traffic rankings) has been claimed and it’s getting harder by the day to unseat those who occupy said land” Here my point is that this is a given for maturing industries. Facebook is maturing, Google has matured, web 2.0 app have matured. That's why start-ups must look (and are looking) at the next thing. Web 3.0, semweb, mobile apps, etc…

I'll leave it at that that, as I think we agree on the general ideas.

Note: I'll repost that conversation on my blog if that's ok with you. Should build more traffic for both since we probably have different audiences (mine is very semweb-focused)

By: chudson

chudson — Wed, 30 Jul 2008 02:04:57 +0000

Greg,

Thanks for the thoughtful comment. My main point is the following - if you have a business that doesn't generate revenue at tens of millions of unique users, I find it hard to believe that doing 2-3x times as many users would suddenly crack the code.

For businesses that have figured out how to convert traffic into revenue, more traffic is obviously a good thing. For those that haven't, I'm not sure what will happen if growth for growth's sake is no longer sufficient to keep the interest of their investors.

By: gregboutin

gregboutin — Tue, 29 Jul 2008 19:29:21 +0000

This time I don't quite agree with your views, Charles. Traffic growth vastly rules in the web world and will continue to do so for a while, for the simple reason that most monetization opportunities rely on fast traffic ramp-up. Online ads (be it PPC, PPA, or PPT), recruiting fees, even new B2B opportunities, which quickly move to the SaaS model, all rely vastly on building traffic, as the main revenue driver before even the monetization potential of this traffic.

Growth is not slowing down across-the-board. Of course, if you're talking about existing web services, those are maturing. Just like any other industry out there, those services follow the typical market cycle we've learnt about in our business studies. Tying curiously into your conclusive point, however, I am convinced that there is a high potential for new technologies, to disrupt the existing value propositions, and to fulfill a whole lot of new ones. I worked recently on the “thinking process” for instance, and what parts of that could be brought online. Today, this is clearly unaddressed. Semantic technologies, among others, could change that, and create a whole new web market from it. A fast-growth one, by traffic standards, and not necessarily profits or revenue. I don't disagree with the need to focus further on monetization, but I think that in many cases getting traffic is the “best-enough” proxy metric, short of being able to turn everything into dollars and cents right from the start. So, if your argument is for the market to focus further on monetization, rather than just traffic, then I can buy some of that. If it is about the web growth slowing down, then I think you need to specify it further, and list which services you're referring to. Because by my count, there are still billions of people without access to the web, and 100's of millions of web users who would use the web order-of-magnitude times more if the value propositions went beyond the simple (by future standards) search/communicate/play benefits in place today. If that doesn't offer huge potential for land grab and hypergrowth, I'm not sure what is!

By: WinExtra » From the Pipeline – 7.22.08

WinExtra » From the Pipeline – 7.22.08 — Wed, 23 Jul 2008 04:03:32 +0000

[...] What Will We Do When Growth is No Longer the “In Thing” Anymore? (Web Startups) [nw] :: Charles Hudson – some very interesting thoughts about what’s next for the startup industry as it tries to move forward in the future [...]

By: HipMojo.com » Distribution vs. Monetization from the Front Lines of the Video Industry

Wed, 23 Jul 2008 02:57:39 +0000

[...] The US economy will make things change very quickly: growth will be less sexy because non-monetized growth will mean more costs and costs alone… and VCs will become more [...]