I ignore a lot of the news I come across on a daily basis. One recent example is the lay-offs at web companies. It’s just all a bit too depressing, really.
So why am I blogging about it?
Well, I’ve related it to a bug-bear of mine today. The lack of sensible business planning in internet start-ups.
It’s caught my attention today ’cause I’ve just read Alex Iskold’s post at ReadWriteWeb about Platforms. Alex highlights the examples of Facebook and Google’s OpenSocial as platforms that have risen with great fanfare, only to fall by the wayside. The reason: no business plan.
These platforms were developed without a clear view to monetisation. It makes me cringe every time I hear of a web company being injected with VC funds. I’m scared it’ll be another funky web start-up with a cool free app that makes no money whatsoever.
I’m concerned because the effect could be a bad image for web businesses. While some of us are trying to encourage companies to spend money on the ‘net (for good reason, may I add) all around us companies are laying off staff or closing altogether because they haven’t made enough money. Companies that had no clear road map for success. Surely that’s just bad business decision making?
Let’s take Twitter as an example. I love Twitter. I think it’s a great service now that my initial skepticism has long since passed. It has no business model, though. Instead they “really want to focus right now on just building the infrastructure“. So where’s the return on that $15.1 million in VC funding?
If I were one of Twitter’s 17 staff members, I’d be pretty scared at the moment.
Let me tell you a secret: Last year I left a company I co-founded in part because money was being splashed out on projects that had no hint of a business plan. Now I’m scared that the industry is doing exactly the same thing.
Am I being too cautious and are these companies simply taking a calculated risk? Or is it time to step out of the box for a bit and re-evaluate?