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Jonathan Deamer's tumblelog: for when proper writing is just too much effort. if you want, follow me on Twitter or take a random shot.

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Jul 15

rickyv says

Jeff Rubin told me about “The Underpants Gnomes,” which has been an emerging reference point in the Web 2.0 business world. The term comes from an episode of South Park.
Some background from Wikipedia:
The Underpants Gnomes have a three-phase business plan, consisting of:
Collect underpants
 ?
Profit
None of the gnomes actually know what the second phase is, and all of them assume that someone else within the organization does.
Sounds like a lot of recent start-ups.

I try to avoid reblogging whole posts beyond a short quote etc., but this one is especially great, and quite pertinent to my recent thoughts.
To be honest, the lack of talk in the tech blogosphere about business models and revenue streams is astounding. Sure, some gadgets, toys and tools are fun and useful. But as world-changing as they might one day be, they won’t become anything if they can’t afford to run their servers.
For so many start-ups, if they’ve given any thought at all to Phase 2, it doesn’t go much beyond either “Get acquired by Google/Microsoft etc.” or “sell ads”. The former isn’t a business model, it’s a lottery ticket. And adverts alone aren’t a magic money making scheme. In online media, they’re a revenue stream, yes, but rarely a whole business model.
I’d love to see some slightly more innovative business models. Or even a few more companies taking the plunge with a Freemium model. Or anything but another perpetually VC-funded bunch of coders with no business savvy.

Jeff Rubin told me about “The Underpants Gnomes,” which has been an emerging reference point in the Web 2.0 business world. The term comes from an episode of South Park.

Some background from Wikipedia:

The Underpants Gnomes have a three-phase business plan, consisting of:

Collect underpants

?

Profit

None of the gnomes actually know what the second phase is, and all of them assume that someone else within the organization does.

Sounds like a lot of recent start-ups.

I try to avoid reblogging whole posts beyond a short quote etc., but this one is especially great, and quite pertinent to my recent thoughts.

To be honest, the lack of talk in the tech blogosphere about business models and revenue streams is astounding. Sure, some gadgets, toys and tools are fun and useful. But as world-changing as they might one day be, they won’t become anything if they can’t afford to run their servers.

For so many start-ups, if they’ve given any thought at all to Phase 2, it doesn’t go much beyond either “Get acquired by Google/Microsoft etc.” or “sell ads”. The former isn’t a business model, it’s a lottery ticket. And adverts alone aren’t a magic money making scheme. In online media, they’re a revenue stream, yes, but rarely a whole business model.

I’d love to see some slightly more innovative business models. Or even a few more companies taking the plunge with a Freemium model. Or anything but another perpetually VC-funded bunch of coders with no business savvy.