What it takes to be a profitable Internet company 97
Zebulun writes "The Red Herring has a really good article that basically examines what it takes to have a profitable internet company and why so few make it. " I think investors are expecting this more and more-the next few years will see some shake outs, something which has already begun to happen. The question is, who will be left standing?
Re:Profitable = folow these rules (Score:1)
Re:noise (Score:1)
See a metaphor here? I see just as many posts on
The inevitable occasional uninformed/childish posts will always be there, since this is a public forum.. so what I'd like to see is those posts followed by complete silence -- to keep from encouraging them -- or responded to by a knowledgeable person providing useful information (denewbiefication) without calling anyone names. Complaining about the noise is just part of increasing it, my friend.
Building an NT box... (Score:1)
1) Don't dare try to install NT with more than 3 logical drives. It will only let you use 1GB of the primary drive.
Care to explain, then, the NT box I have on my desk? It has a 6 GB C: drive / partition formatted NTFS. Yup, one piece. It's an EIDE drive in a removable case. Then, there are 3 more EIDE units before I get to the 2 IBM SCSI units. That doesn't even count my CD and CDR, and then there's the SyJet... That's nine physical units, with the potential for many more logical drives. I have the full capacity available on all my drives, and I've never had a problem.
2) Don't ever start up NT with one of your external RAID arrays unattatched. It will basically list the drives as offline, and won't let you do shit about it until you recreate the RAID container. And for the RAID unwashed out there, that means you gotta wipe the drives.
You're right, this can be a pain. It is possible to recover from it. With Disk Administrator, (under the Start / Programs / Administrative Tools (Common) menu), select all the drives that are affected. Select "Configuration > Restore". NT will now ask you for the disk that has your config on it. You do have a backup of your RAID config, right? Wait for it to finish grinding on the floppy, then NT will ask you to -- you got it! -- reboot.
If the server is a new install, you'll probably have to go in and replace all the permissions on the files in the array. If you don't, you'll most likely get a "Device not ready, RETRY / CANCEL" message box. This can be rather confusing... it's the same message you get when you try to access the floppy or CD drive and there's no media in it...
I'll agree with what you said about weird problems. It can take way too long to establish exactly what's causing NT to puke. Been there, done that, and all I got was this lousy t-shirt... and a head-start (pun intended) on grey hair.
Re:Just go away (Score:1)
Re:How Ill build the most profitable Internet comp (Score:1)
Re:Off Topic (Score:1)
Re:Profitable = folow these rules (Score:1)
A few points to make: One of the first things to remember when making claims such as this is "propogation of effects." While a choice may appear to be the more financially beneficial one at first, the effects of that choice may very well end up costing you lots and lots of money -- and that's definitely not a good thing (I think we can all agree on that.)
For example,
Don't use Oracle...
Okay, so it may initally cost effective not to use Oracle because the help is more expensive and the license costs an arm and a leg, but you have to think about what happens when you launch your website. IMHO, Oracle running on a Sun or similar *NIX box is inherently more stable and will provide better performance than MS SQL on an NT box. If my website is /.'ed the first day it goes live, survives the onslaught (where MS SQL would choke and die,) I think that extra $$$ is well worth it. I think the shareholders would agree as well.
Don't use Unix (any flavor)...
Again - think about it. IMHO, a Unix-based box will crash less and handle a higher load than a similarly equipped MS SQL box (sure -- if you give MS SQL twenty clustered 4-way Xeon boxes it can handle a high load, but there goes your next years' profit out the window when you need to buy a room at Exodus and hire 5 full-time admins to keep it alive - by clicking checkboxes, of course)
Don't support Linux (yet)....
I'm not going to touch this with a 20-foot pole....:)
In the end, the cost of your consultants and the initial fixed cost of the software/hardware itself can nicely be offset by the amount of money you'll save in the future by having a fast, stable website that doesn't crash and makes the users happy. And what does that get you (assuming you have an idea that doesn't suck?) -- $$$.
Re:Porn is the most profitable - not a troll (Score:1)
p.s. the reason porn companies arent public yet is that the regulatory environment is up in the air. the moment the gov't defines the rules for online porn will be the moment seth warshevsky (sp?) is the next dot com billionaire.
Re:It'll shake out (Score:1)
Whoops! (Score:1)
Re:The formula (Score:1)
...And some people to look after it all.
Alternatively you could "out-source" some of the processing requirement by doing JDBC from client browsers.
I'm sure there's still something more to it though.
Oh yes, *cookies*! Got it, now
~Tim
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Re:Profits aren't everything (Score:1)
Lots of dross and hype.. (Score:1)
Who clicks on banners?
E-Commerce: Where's the advance on a good catalog/mail ordering service apart from industries such as books and music where there is such a huge range. When I buy a car, I want a test drive..
I think the internet needs a 'killer' app but if knew what it was, I wouldn't be sitting here sending this E-mail.`
Making a profit is hard. (Score:1)
A winning company has to have a product or service that enough people want, and management that knows how to keep up with the demand.
Re:noise (Score:1)
off-topic threads will be down-moderated.
Experienced (and tired)
thresholds higher, and the noise will decrease
in their eyes. Newbies are left with a free-for-all
high-noise forum until they learn to raise
thresholds and order by score -- thus a true
newbie won't find much useful here until he
learns (& desires) to filter out the junk.
The only problem I see, though, is that with
increased volume more moderator points have to
be spent filtering off-topic posts and trolls,
meaning that fewer are left to award to the
good posts. Every time I've moderated I have
always felt more like rewarding the good than
filtering the bad (due to the limit of 5 points)
and so a "0" or "1" point crap post stays that
way.
I have a feeling the moderators need more points
(or there need to be more moderators) --
perhaps based upon the comment volume / day.
CmdrTaco - are you listening?
Re:co-op or expert only isp's (Score:1)
in a very technical savvy location. I work for an
ISP in Dayton, Ohio and know how low the number
of technical users are. Now, admittedly, they are
alot more invisible than the problem cases (and
there are plenty of those [dumb users]), but the
number of them Could Not keep the isp afloat even if it were only one person maintaining the hardware. Silicon valley? Dunno, ask me when I live there, but in the midwest... Naaaaah.
Re: (Score:1)
Re:Porn is the most profitable - not a troll (Score:1)
Re:My HUGE company - The internet keeps me alive! (Score:2)
Maybe you need to make products for Linux? My impression is that the Windows market for what you're producing is pretty much saturated, thus the low revenues. Unfortunately, Linuxoids want it all for free.
You might want to consider BeOS - there aren't that many people buying it, true, but those who do are comfortable with paying for software.
D
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Mind your business: MS can't make you profitable. (Score:1)
No one vendor--even MS--will make you profitable. I'll make some suggestions, but first an obeservation:
Let's see, just how profitable is Microsoft's portal business? Hint: it isn't. Compare them with Yahoo!, which is profitable (and has been for some time). Guess which one uses Unix? (FreeBSD, to be exact.) Guess which one is located in the SF Bay Area?
Here's my list:
Failing in any one of these areas--hiring, customer relations, planning, risk management--can doom you no matter how good your marketing plan is. Yet the overwhelming number of Internet startups I've seen have come up short in one of these areas--and more than a few are already gone.
Cool business idea... (Score:1)
"NT for successful businesses" my a**, last time I saw NT running in a company, it was used for a Mail/Web/DNS/Proxy-Server - every time the proxy server crashed (several times every day), it took down all other services with it...
Re: How to *really* make a profit from MS (Score:1)
What an odd post. If it weren't for the San Francisco point I'd think it a simple troll. Anyway...
There are plenty of non-Oracle, non-MS database managers. There are lots of cheaper RDBMSs than Oracle too. Most people don't need the sort of scalability SQL Server provides, let alone Oracle.
[This stuff gets almost on-topic by the bottom, you know. No, really.]
ROTFL. Having a GUI interface to configuration settings does not magically make the configuration settings easy to choose. A single clicked checkbox out of place could nadger the system just as easily as a line wrong in a .rc file. And a really knackered NT system means you have to reinstall the whole OS and all your apps all over again. I can cause this situation just be installing and de-installing parts of NT Option Pack - great eh?
Try, GUI interfaces could provide a nice, friendly, safe-ish interface to configuration. But Microsoft don't use them like that. They use them to hide your settings away in the registry and metabase, rather than have them available in a textfile. So if you want to get the settings out and move to another platform - or just keep your settings over yet another OS reinstall - you are screwed. You are locked in not only to MS software, but one MS box too.
[Don't believe me? I can get this on topic by the end. Betcha.]
Really. Odd, then, that you choose to list all the major systems that aren't by Microsoft and manage to systemically diss them without justification. I mean what's this all about:
Obviously this makes no sense (how does having icons make one anti-MS?) but you also forgot to tie it into the theme for today, namely What it takes to be a profitable company on the internet.
And the answer, of course, is this:
Get yourself bought out by Microsoft.
Or any other big internet company. AOL is good. But Microsoft is still best.
You can't really make much of a profit on a purely internet business at this point in time. But if you create an innovative new bit of kit you can get Microsoft or one of Microsoft's enemies to buy it to use in their little fight. Then cash in your MS shares and take a nice holiday.
That is all.
[Once again, I win. Give me yoghurt!!]
Re:Building an NT box... (Score:1)
Re:Tag code is wrong for linux... (Score:1)
Also, when I was on the Ada 95 Mapping Team, then Ada 9X, we talked about adding something like #if to Ada, but the language reviewers always shot it down. They believed that using static constants and if statements is always better. I never figured out why.
Can't swing a dead cat... (Score:1)
Unless you can spend the $$$ on an inside sales team to bring in the ad dollars another portal is a bad idea. Most internet users have become savvy enough to not use them OR already have their favorite and pass that information on to those friends/family who are newbies. If you look at how many portals have sprung up over the last year only to vanish or be abandoned, you'll see that it is a lot more than Database + CGI scripts = Money (and marketing). OK, so you market like crazy, bring in the eyeballs, but how do you keep them at the site and keep them
/. is a prime example of a site which could be/is a success.
Marketing/bringing in new viewers: The best way in the world, word of mouth and links (i.e. FREE). I found this site from a link at Mac OS Rumors http://www.macosrumors.com , and I have hooked half the geeks here up with
Keeping viewers coming back: Two words, ya'll, frequent updates. If you have a site and you only update once a month, unless it is a really really hot topic those people who have visited once or twice won't be back again.
Know the audience: Well, look at this board and at the polls that are done, and look at the articles posted at
Another way to make money on the web, keep it original and free. By original I don't mean something that no one else has done, I mean your own content. Sure there are sites that syndicate their content, but why should an advertiser pay you higher CPM's/CPC's for content that isn't yours? Why should a company or person pay for a sponsorship on a site that frames someone else's efforts?
And I suggest free because if you are selling the info/files/images chances are someone is giving them away at another URL or in a news group.
Of course after a while if there are a huge number of sites all offering the same services/content the value will go down, but those sites that make efforts to stand out will make the best buckage.
Just my 2 bits
Relatedly.. (Score:1)
Re:It'll shake out (Score:1)
Yahoo is a pure internet company, Cisco is far from it.
A company like Cisco, which supplies much of the backbone and the "means" of the Internet has a much more solid foothold. While Yahoo has name recognition, I would not bet that they will be around ten years from now (though it certainly is possible).
Not that Simple (Score:1)
For every company that has established a name for itself on the Internet, there are hundreds more each week that are coming out with the same products or services. The barriers to entry are that low. Already we are seeing some Internet companies give service away for free, planning on relying completely on advertising. That is not a strong business plan in my opinion.
Another problem with pure internet companies is that while there is some loyalty, a better price on exactly the same service or product is only a "click" away.
While this is wonderful for consumers, it makes it very dificult for the companies.
Personally, I believe that the companies that make it will be the late-comers. Portals will be owned by "established" companies (many, such as Infoseek and Altavista already are). AT&T and Microsoft will become the largest ISP's. Wall Mart, Toys R Us, Barnes & Nobles, etc... will become the largest goods providers on the Internet.
These companies have the revenues and profits to support a losing game like the Internet.
Venture Capitalists throwing money left and right to anything with a "dot com", and insanely high stock prices are not going to last forever. The profits have to be there.
Re:What's it worth? (Score:1)
Their service is good, their responce to missing items is excelent. Overall, unless there's a large difference in price, amazon.com are known good and trusted, by me.
Re:Microsoft makes profitable companies. (Score:1)
co-op or expert only isp's (Score:1)
Note to Microsoft astroturf squad (Score:1)
How about sustainability? (Score:1)
How does one go about taking a neat idea, an impulse, an epiphany and turning it into a project or company that can sustain itself, though? There ought to be a HOWTO out there on that!
How to be an entrepeneur and not obsess about making big bucks...the two seem to go hand in hand these days. Bah!
And yeah, I'm obivously too incoherent to be a successful (read: profitable) businessman
Re:Hmm.. (Score:1)
Re:How Ill build the most profitable Internet comp (Score:1)
Off Topic (Score:1)
Re: (Score:1)
Noise echos and moderation points (Score:1)
I think that the reply to the crap is probably just as bad, and I'm definitely guilty, but I guess I was just trying to figure out so what the heck :-)
As for the moderator points, they are already generated on a ratio to the number of comments, but the system is definitely starting to sag. I also try to accentuate the positive when I'm moderating, but today I just flat ran out of points, and there was definitely still some good stuff that needed +1's and some crap that needed -1's.
In checking back now, that's still the case, but I'm still out of points. Ah well, its just a website, so I'm not stressing over it, but it seems to be a bummer at the moment - that's for sure.
Re:Microsoft makes profitable companies. (Score:1)
Re:Hmm.. (Score:1)
I just can't stop reading this sentence. It is pure poetry.
Thank you.
All wrong about San Francisco. (Score:1)
The Bay Area attracts smart people. I know many folks who turn down bigger pay in cheaper places, because those places are fooking *boring*. Interesting, stimulating places are brain magnets, high rents or no.
If you have a good idea and need smart people to make it happen, you would be hard pressed to beat SF or Boston.
*Starting* to?? (Oh yeah, and a solution) (Score:1)
The bias is bad enough, but there's another reason why the current moderation will always be flawed: immediately giving inflated scores based on a user's recent history, but with a moving window used for averaging their scores. I've seen so many mediocre posts given scores of 2 lately that it's not even funny. (And no, I'm not talking about pro-Linux rah-rah crap getting moderated up, which is lame itself -- I'm just talking about your average run-of-the-mill posts that don't really have much to say)
Once someone reaches the plateau that is necessary for them to receive an immediate 2 on any post, it's a pretty sure bet that they'll never drop back down again, which (1) gives a false importance to everything they say, and (2) helps insure that their average will remain high. So, you end up seeing all these mediocre (and quite a few with outright factual misinformation)posts with scores of 2, since unless they're being inflammatory or stepping on the wrong advocacy toes, nobody's going to bother to waste their moderation points knocking down a so-so post.
Oh well, just thought I'd mention it. I don't really mind this post getting knocked down for being off-topic, since as someone who doesn't fawn over Linux, I don't have any plans to reach the 2-point posting plateau -- it would just be nice for when I'm trying to read other people's posts and would actually like to make use of the filtering here.
Oh yeah, and so that this isn't taken as mere rabblerousing, here's the solution: Reset every user's score back to +1 once a week or so -- people who say something interesting will still get other posts marked up for a short period of time, but we'd get rid of a lot of the deadwood who are just bumped up because they happened to say three interesting things in a row back in 1998, but who aren't really pulling their weight anymore.
Cheers,
ZicoKnows@hotmail.com
Good B-school perspective (Score:1)
It may be B-school - but there's some worthwhile things even techies can draw from there.
Re:Moderation has MADE /. READABLE (Score:1)
I have to disagree. I was about ready to give up until Rob put that system in. I've set my threshold to 2 and never see any of the "first post!" or "NT rulz" crap. The only reason I even saw it today was because I read a post talking about it that had been moderated up. I bumped down the threshold to see what all of the commotion was about. Well, back up to 2, I guess.
Growth already realized. (Score:1)
Amazon.com, which has never turned a profit, is worth much more than a mom and pop store making a
modest profit.
Yes, but the stock price of Amazon.com has already realized that potential.
If you buy Amazon.com right now, for a long term investment, you are betting that Amazon.com will be able to succesfully run Borders and Barnes & Nobles out of business.
They need to, in order to justify their market capitalization at the moment.
So yes, you are buying on potential... but in this case, it has already gone well beyond what would be even remotely sane growth estimates
I can give the numbers to back this, if anyone wants to dispute me.
Re:Microsoft makes profitable companies. (Score:1)
Re:Don't generalize. (Score:1)
The real problem is that internet startups lack a product or good content worth selling. It seems that a lot of new internet startups rely on one of two things: banner ads, or internet sales. It seems to me that there are an aweful lot of sites trying to be an all-in-one solution. We have ebay for auctions, but now Amazon and Barnesandnoble want a piece of that pie too. I'm ranting off topic. My point is this:
For a business to make money on the internet, they have to have a unique idea, good content or product, and a well designed web site.
-Z
Loyalty comes from great customer service. (Score:1)
I now buy books and music exclusively from Barnesandnoble.com. I would use Amazon except I live in WA state, so I would have to pay sales tax. Also, Amazon just started selling short films online, competing with the startup company my girlfriend works for (AtomFilms.com [atomfilms.com]).
Re:Noise echos and moderation points (Score:1)
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Re:It'll shake out (Score:1)
Re:How Ill build the most profitable Internet comp (Score:1)
Oh, you already are.
Formula for success? (Score:1)
The point is, sites like these create a following - mainly by the interaction. They site may have the interaction built in (like
How to make money on such a site is the next step - you could probably get advertisers - just don't overburden the user of the site with banners. Slashdot has it perfect, a single banner at the top, nothing more (not too much of a problem except when it is slow loading). I sometimes even click on the banner if it is interesting enough (and the banners should be targeted to the users of the site). An alternative to make money is to actually sell something on the site - software, bumper stickers, t-shirts. Another way is to sell the site - ie, have a "free" side (AC posting only) but pay for the privilage of a login (this may or may not work for some sites).
I am sure there are other ways - but the point is that the most popular sites are those that foster community.
Re:How about sustainability? (Score:2)
Of course if you just want to do something cool, first figure it out, then co-locate a server where there's plenty of bandwidth, and you can develop it for costs in the $ 200/month range. Once you get big enough to be noticed, you'll have higher bandwidth bills, but at that point banner ads should be able to pull in money.
You don't really need a big company to do something useful. Check out my web site [ http://www.amazing.com ] - I have FAQs and information on subjects from cruising yachts to digital video, and people find all of it quite useful. All it costs to put up is my bandwidth bill. In fact, this was basically how Slashdot was started, although obviously Rob is much more successful at creating a system attractive to his market segment than I've been.
Now, if you want to feed, clothe and house yourself, that's another matter. That requires a profitable company.
Basically, what you need is a revenue model - where's the money going to come from? With amazon.com, it was sales of books. With eBay.com, it's auction fees, with recycler.com it's early access subscriptions and ads from auto dealers. Once you've figured that out and put together a realistic business plan, you have something worth looking at.
Hope that helps. Hey, if you got a really good idea, I have bandwidth to spare at the moment.
D
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Porn is the most profitable - not a troll (Score:1)
Even if you find it distasteful, there is no arguing with the numbers - online porn is a huge business with incredible growth potential.
Re:co-op or expert only isp's (Score:1)
Based on just equipment and bandwidth costs, I figure that they need about 13 - 14 users per line just to break even. That does not include any rent, employees, etc. Considering that the norm for the industry is 10 users per line, and that is for large POPs, busy signals would be a major problem. I know one person who uses it and says that getting online between 6 and 11 PM is next to impossible.
Don't generalize. (Score:1)
I don't think that any experienced business person would buy what you just stated, either - no matter how net-newbie they were. 90% of internet startups fail because the people who start them are not-so-great-techies with no business experience and not enough money to get things off the ground --- they don't fail because they can't make money, but because they can't get capital to even start making money.
What's it worth? (Score:1)
Somewhere I once read a story told by an economist, where he offered a reporter a million dollars for their left arm. The reporter, or course, refused. But then the economist said: "Ah, but you see, now you're a millionare! You have something that's worh a million dollars!"
The point here is this: Nothing is worth anything unless someone wants it. If no one want to BUY amazon stock at it's current price, and the price starts to fall (see: supply and demand chart), you're going to wind up with a company that's suddenly got to prove to it's share holders what it's REALLY worth. As in profit. And trust me, this whole market share/eyeball stuff is NOT going to last long when you've got an angry horde of stockholders outside your door wondering why their $100+ stock is sudenly worth about a share of Marvel Comics stock.
Re:Tag code is wrong for linux... (Score:1)
I don't know if it is online, but Inc. Magazine ran a couple articles (main subject of that issue) about this time last year that mentions this, but it was more in relating to spouses starting businesses and protecting the business from a divorce. Rather interesting read if you are into this sorta thing.
Re:What's it worth? (Score:2)
The formula (Score:1)
Yahoo, Alta Vista, eBay, google, etc. They're all just databases and CGI scripts.
Okay, maybe marketing too.
Just go away (Score:1)
Whoa - when's the IPO (Score:1)
They've all got it wrong... (Score:1)
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Re:Profitable = folow these rules (Score:1)
Remember when AOL connected to the net? (Score:2)
Remember when AOL first went online? The chaos and idiocy that ensued?
Perhaps that is what is happening here. I have a hard time believing this is a bunch of Microsoft shills, so I'm forced to hope the posting will simply get better in time.
Either that or /. will go the way of newsgroups, with abysmal signal to noise...That would make me sad, so I'll keep hoping.
Apparently you've never had to admin an NT box (Score:1)
1) Don't dare try to install NT with more than 3 logical drives. It will only let you use 1GB of the primary drive.
2) Don't ever start up NT with one of your external RAID arrays unattatched. It will basically list the drives as offline, and won't let you do shit about it until you recreate the RAID container. And for the RAID unwashed out there, that means you gotta wipe the drives.
3) Need a BDC due to network growth? Better buy another server, cause you can't make an NT server become a PDC or BDC after installing it as neither. It's either reinstall an existing server or buy a new one.
4) Want to change just about anything? Better schedule a server downtime, cause you're rebooting. And for those of you who say "at least you don't have to reboot after changing the IP address", ever noticed how fucking unstable NT networking gets after you change that there IP without a reboot?
5) Got a wierd problem? Chances are you're gonna be stuck there for a nice long time with many many reboots, almost definitely a reinstall of the software in question, and a strong possibility of reinstalling NT.
I'll take having to know my way around rc scripts over NT shit any day. At least it's really hard to fuck up a *nix box enough to require a reinstall, or at least a big dose of stupidity, in which case what the hell are you doing running a server?
NT means MORE admin time, MORE potential to royally fubar the server, MORE downtime. In the last 9 months, I have been activelty administrating a number of *nix machines and several NT machines. I've never had to stay at work late as a result of the *nix machines. The NT machines have given me many long nights of extreme pain. Especially that one where I was at work till 4 am. I wanted to drive to Redmond right then and slap every member of the NT development team.
"Microsoft. Where do you want to go today? Better be close, 'cause you're walking."