CNet News has reported that Twitter has recently signed for $15-$20 Million in VC funding…
“A source familiar with the negotiations tells me that Twitter signed a term sheet for “either $15 million or $20 million” last week. We’re still trying to find out who is in, but the word is that it’s largely an inside round of funding with one outsider setting the price.”
I am amazed at how companies with no business model in sight can get so much attention and so much funding while other companies that offer a real service are finding it difficult to get funded. Obviously some people think that just having a lot of people using your services makes it valuable. My guess is that Twitter will end up like YouTube. Some company will end up buying them and that company will have to take a hit and pay for whatever it costs to keep it online until they figure out some business model.
I hope you twitter fans like webpages 80% covered in Ads as well as Ads in your twitter feeds.
In other news, I have yet to figure out why people use Twitter.
Last night I decided to investigate something called Micopayments a bit more. Essentially it’s the idea of making a very small purchase for a product or service online. Since we’re talking cents and dollars the biggest problem is making it worthwhile for sellers. The easiest way to make a purchase online is normally with your credit card. But, credit card companies charge per transaction and if the transaction is not sufficiently over that fee then the seller actually loses money. I think whoever comes up with the best way to do micropayments online is going to make a pretty penny.
After I was done reading about micropayments I found a link to various Business Models. It was very interesting to read about all of them.
What will it take to have you hand over your money? Maybe that sounds like horrible question to ask, but I really want to know. People have money, people want things and people are willing to pay money for those things… right? Well, what is it that people want? I guess people want a lot of different things and there are many companies providing to those needs. I want to be one of them!
I have had many discussions with friends about which companies are making the big bucks these days. Obviously, for a company to make money they need to provide something people want and implement a successful business model. There are many business models that a company could adopt. Quite a few websites make all of their revenue from ads while others actually charge money for access to a service they provide. Everyone wants to find the perfect business model and I am right there with them. It is farily difficult to think outside the box and come up with something new. And even if you do think of something new the timing is really hard to get right. So what’s the solution? I don’t know. The next big thing doesn’t have to be something brand new I suppose. Myspace wasnt the first site to offer a place for people to put up pictures of themselves. Google wasn’t the first search engine. Digg wasnt the first user contributed content site. I just need to find that one thing that people need (or dont even know they need) and get it out at the right time.
I am also discovering that another problem is that most of the time you don’t know about the problems that exist. Why is this a problem? People pay for solutions and other things that they want. But, it’s really hard to solve a problem you don’t know about or provide something to people you don’t know they want. So I suppose one solution to the problem would be to find a Domain Expert of some sort and learn from them what the problems are. Any domain experts out there?
Yesterday, The founder of Xmission Pete Ashdown paid a visit to Neumont and I had the opportunity to listen to him speak. Pete shared various experiences on how he developed the idea for his ISP company and also how much work it took. I wish I took notes! He used some interesting terms that I heard for the first time. The one that stuck out was Sweat Equity. He used this term when he was talking about all the traveling and work he had to do just to run his first server. I suppose when you think about sweat equity it makes sense. There are businesses interested in paying you for something they didn’t want to do themselves for various reasons. Some reasons might be because the initial risk or startup costs are very high. Services that require the kind of work Pete put into his company are what makes his service different than something such as a new website idea. Anyone can copy someone’s great site idea (MySpace, Facebook, etc), but it takes a lot more work to start a company with tangible assets and services. This of course got me thinking more about what I really want to accomplish in the future. I think if I had a choice between developing some great site and actually starting a company with employees I would go with the later. It would be great to start something with employees and provide a valuable service and have something that I could invest some sweat equity into. It’s going to take a lot of work no matter what I choose to do.
