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Startups Shouldn’t Necessarily Count on the Twitter Strategy

Proving a Business Model in the Beginning for Long-term Viability

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Early in the week, Twitter revealed its new "Promoted Tweets" feature, or ad platform (though the company doesn’t like calling it this), and essentially its long awaited business model. The jury is still out on how successful a business model this will be, but it’s already created a huge amount of buzz, and Twitter has grown enormously up until this point without a business model.

Obviously not all startups can achieve the success of Twitter or others who have been lucky enough to get acquired by a major corporation like Google (YouTube anyone?). Having a business model as early as possible is in most cases is important to the long-term viability of a business. At SXSW last month WebProNews spoke with Matt Chasen, founder of uShip, who talked about this concept.

"When I founded uShip six years ago now, we were very focused on proving out the business model," he says. "A lot of new companies you see are hype driven. They’re all about users, users, users…build a new cool tool, hope to get as many users as you can, and just kind of figure out how you’re going to make money later."

"The key I think for a startup today, and other folks have evangelized this, is to ‘fail quickly’. Figure out what you’re going to do," says Chasen. "Try to find a business model that’s going to make the company money, because without one, you’re not going to be viable long-term."

"If you’re gonna fail, fail quickly, change your strategy, then find another model, and hopefully one will work," he says, calling the strategy of protoyping new businesses "inexpensive and quick."

Do you agree with Chasen that proving a business model from the beginning is the better way to go, or do you think building a cool product and attracting users first is a good strategy? Share your thoughts.

Startups Shouldn’t Necessarily Count on the Twitter Strategy
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  • http://homegrownwebmaster.com Joseph

    iTS true and really, how many people have investors standing behind them with 40 + million ;-)

    I started back in 2001 and built it all from the ground up.

    Thanks for the article.

    Joseph

  • http://www.twitter.com/golateef Lateef

    The one rare exception for foregoing a robust revenue model is proven viral user acquisition. If you can acquire users virally with low customer acquisition costs, it makes sense to grow before you monetize. The catch is that very very few startups can grow virally, which is why the ones that do (Twitter, Facebook, Foursquare, etc.) are valued so highly.

  • http://www.personalbrandgrader.com Adrian Chira

    You are forced to monetize quickly, mostly because of the lack of funding. You need a general idea of the business model and then you may to refine it. Take the example of Hubspot. When they started they didn’t have a product. They started with a blog and they built audience around it. Then they created the product based on the insights they gained and quickly they established the monetization model (monthly fee for their services). They are still growing in terms of clients and revenues (pretty aggressive for these times) but they already found the model that works in their case.

  • http://www.sahelmarketing.com Web Marketing

    I agree with Matt. Most business startups have no business models just sail with the winds until they see a storm ahead to decide what direction to really take then think about a destination. If you fail quickly and are nimble enough you can get back up your feet quickly and rethink how to make your business successful. Thanks to the web you can quickly try out a few things quickly with no huge expenses to see what alternative is more m promising.

    After all even those who start with a great business model on paper do not necessarily make it. You have to make a few tweaks as you go otherwise you will be out of the game in no time.

  • http://castlepictures.com David

    I couldn’t agree more. There’s no substitute for a good business model. Twitter has lived on external financing since its inception . You need to know how you’re going to make money from day one

  • http://freewpinstaller.com/ Keenan Welcher

    Acquire so considerably from your contemplating,and i favored your report!

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