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"We'll figure out how to monetize it later"

By - December 20, 2004

That’s a quote in today’s USA Today from Lars Perkins, product manager for Picasa, Google’s recently acquired photo software. It’s a sentiment that rests deep in Google DNA – make the product first, figure out the business case later. It worked for the original Google service, and it’s clearly guiding Print, Orkut, Froogle, and News (though some of those of course are supported by advertising). I don’t have the answer to this question, but it’s worth raising – how long can this approach to the world stand? It’s certainly a wonderful luxury to have – make a useful product, then figure out if/how it might make money. it reminds me of my preferred approach to publishing – make great editorial, then figure out how to sell it later. The only difference – with editorial, there was always a model to fall back on – advertising and subscription. As I’ve pointed out before, I’m not so sure that advertising alone can foot the bill for all of Google’s innovations.

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  • http://www.torstensson.com/weblog/ Henrik Torstensson

    Isn’t Google’s basic fall back opportunities the same as more traditional editorial media? Advertising or a paid model (subscription, one-time fees etc)? Partly automating two parts of the production of an editorial service, the editing and the sales, do not change the basic ways of attracting revenue.

    With low mariginal costs to run new products, Google should have no problem to use its current model of developing products. As long as new products do not become major cost drivers, due to popularity, there is no immediate need to monetize them as long as the total portfolio of new products launch at least a $200 million business every now and then.

  • http://www.makeyougohmm.com/ TDavid

    There are some exceptions for Google like the Google Applicance (which starts at 20k) and the new satellite service (keyhole), but I agree that this model may not hold up for the long haul.

  • http://www.jobczar.us Frank Ruscica

    Make “expert space” transparent, become the eBay of developing/extending expertise, by hosting a workflow market/ecosystem. Details coming online at http://www.jobczar.us.

    Some reviews:

    “Frank, you are a good man. Have you thought about joining this team? Your only alternative, of course, is venture capital. But their usual models require getting rid of the ‘originator’ within the first eighteen months. With Netscape it took a little longer, but you get the idea.”

    Randy Hinrichs
    Manager, Learning Sciences and Technology Group
    Microsoft Research
    December 1998

    “Hi Frank, Thanks for your time today. If you would like to provide us with further information about your [business plan for a CLLCS startup], we would be happy to review it in more detail.”

    Tristen Langley
    Draper Fisher Jurvetson
    June 30, 2004

    “I just spent about an hour surfing around [JobCzar.US] with a bit of amazement. I run a little company…We are a team of folks who worked together at Amazon.com developing that company’s personalization and recommendations team and systems. We spent about 1.5 years thinking about what we wanted to build next. We thought a lot about online education tools. We thought a lot about classified ads and job networks. We thought a lot about reputation systems. We thought a bit about personalized advertising systems. We thought a lot about blogging and social networking systems. Eventually, we came up with the idea behind 43 Things.

    …I guess I’m mostly just fascinated that we’ve been working a very similar vein to the one you describe, without having a solid name for it (we call it ‘the age of the amateur’ or ‘networks of shared experiences’ instead of CLLCS, but believe me, we are talking about the same patterns and markets, if not in exactly the same way). Thanks for sharing what you have – its fascinating stuff.”

    Josh Peterson
    Co-Founder/CEO
    The Robot Co-op
    December 12, 2004

  • http://blogs.msdn.com/jacobcy Jacob Cynamon

    I’m surprised that none of the other commenters mentioned DARPA. Tom Junod, in the December ’03 issue of Esquire (http://www.keepmedia.com/pubs/Esquire/2003/12/01/306681?from=search&criteria=darpa), wrote an entire piece discussing DARPA and several of the projects on which they work. They appear to have the very same model of doing some really cool R&D and only later taking the time to see if they can apply the technology. Google is not one of the first organizations to develop first and monetize later – only the most publicly known example.

  • http://oliver.thylmann.com Oliver Thylmann

    The question is really one of marginal costs as somebody has already pointed out. If you build a platform, a way to get things done, as your core business, then getting things done becomes cheap.

    The thing is that the internet, services, do enable that. A consultancy will employ good people when they find them. You have an open position and if you find 3 people that are good then you will employ them because the upside is very big.

    The same goes for coders. If you have a good way to manage coders that build things that are immensively scalable and reusable then you can just employ good people and take it from there. Especially if you create an environment conducive to creativity and creating new knowledge, then you can very well succeed if we are in a knowledge economy.

    You don’t need huge up front costs to cover to start something new. Several things likely have lots of similar problems. Getting statistics for high volume things is hard, but once it is settled you can do that for a lot of things. Launching big sites easily is a problem, but if you can do that it is settled.

    The problem becomes then the guiding light you all follow. You can’t run in all directions as you need some cohesive thing that bounds the company together, that makes it a person.

    Interesting times.