economics Archives - Page 5 of 5

Blogs are a stadium

Posted on September 9, 2010 by Steve Sammartino

I was asked today about how blogs should be built and leveraged from a commercial perspective. It seems to be a regular question I’m asked. The giving element that is required in the blogosphere seems counter intuitive to the way our minds have been trained via the industrial complex. They often struggle with the fact that we just have to give, and the law of natural economics just kicks in. So I came up with this analogy which I think makes sense and explains how it should be approached philosophically.

Blogs are like a football stadium.

The game is played in the middle of the ground.

In blogs the middle of the ground happens to be where our posts are geographically placed.

This is why people come to our blog. To see the action. To learn from and be entertained by the actual game (posts)

But like all good stadiums we have related infrastructure around the edges. Our details, company, tweetstream, contacts.

If they like the game we play (our posts) they return. The crowd gets bigger, and they tell their friends to come.

Like the stadium the revenue comes from all the related elements like the concession stands, the parking and the sponsorship. The stuff that generally lives around the edges… both in stadiums and our blogs.

But we must never forget why they are here. To enjoy the game. They only ever return because the enjoy the game (the blog posts). So what we need to do is build our industry around the game, rather than charging for tickets at the gate. Charging entry just doesn’t work beause there is far too many games they can attend. (more than 200 million in fact)

So when someone asks you about how to make a blog work. Remind them of ‘stadium economics’ and that it’s the quality of the information and entertainment which earns us the right to sell them the occasional hot dog.

Economic irrationalist

Posted on April 16, 2010 by Steve Sammartino

Lately I’ve been making a few decisions which are economically irrational. Making decisions which are, on the face of it, financially inept.

For example, I starting to feel a sense of loyalty to my chief technology officer for rentoid.com

He’s not the cheapest and he’s not the best. Probably somewhere in the middle for both. I could probably get someone cheaper with similar skills, or better for the same price. But I don’t. In fact I tell him that I’m loyal to him. A large part of why I want to succeed so that he can succeed also, to share it with him. Even though he has not risked the capital, or the time that I have on the project.

Why would I act this way. Well I like working with him. He’s a nice guy, and sometimes that’s enough.

I guess you could call me an Economic Irrrationalist. And it just feels right.

Self taught

Posted on April 10, 2010 by Steve Sammartino

With the exceptions of reading and writing, all of the most important things I know (and can do for that matter) have been 100% self taught.

Marketing, Public speaking, Entrepreneurship, Motivating others, Creative writing, Financial Investing, Surfing, Gardening / Growing vegetables, Weight training, Riding a bicycle…. everything.

I think the best way to learn is by paying attention and being curious. Which always leads me to observing others, reading and getting out there and having a go at things.

Observe, Read, Try. Repeat.

That’s it. I find that when the desire is there, the rest comes easy. Which is why I’ve always done much better at everything outside of my schooling. Things for which I had real desire. The unfortunate thing about this ingredient, is that it is removed from most of the development & selection programs in modern society. Instead, we say ‘Rote learn this’, then we might let you do something you care about. One great example is that Architecture University studies require physics as a prerequisite, and yet Architecture studies don’t involve physics, and architects never do the engineering function in building.

Startup blog advice: Don’t let a terrible system, reduce belief in your own capabilities. The stuff that kept you out, you didn’t really care about anyway. It was a rule built by someone else to protect themselves. If you forge ahead and teach yourself, the right people will notice. They will come searching for you because they understand not just the importance of what your know, but the value of how you went about learning it.

Web Economic Models

Posted on June 12, 2009 by Steve Sammartino

There are 3 major economic models we see with web businesses.

Option 1. Create value, and take a small percentage of the value they create (ebay / amazon)

Option 2. Create value, and take nothing. The free model (twitter, youtube)

Option 3. Take more value (either from VC’s or customers) than the value they create.

Obviously option 3 is what we’d call unsustainable. There are many dot gone companies under this banner. Pets.com comes to mind as does Kozmo.com

Option 2 ends up selling advertising, or to another internet company with deep pockets – Facebook comes to mind. We are not Facebook, we will never be Facebook. We don’t have the page impressions, loyalty or any of the stuff needed to sell enough advertising, or sell the entire ship.

Startup blog advice is simple. If you want to have a web business, have a price for your service. Call me old fashioned, but it’s the simplest way to make a living on the web. Sure, we may have to provide more than what we sell – have an augmented product, but the economics of ‘free’ aren’t enough for ‘us’. Free might work for them…. But if we’ want to survive, we’ve got to sell something. If people wont buy what we sell, then we have 2 options.

(A) Improve what we offer

(B) Sell something different

But be sure of this, we need a price and giving stuff away is a quick way to go out of business.