If you have dreams of getting to millions of users you need to think pragmatically about how you will meet this goal. Learn a series of questions Sramana uses to evaluate ideas.
- So you know I coach entrepreneurs on a daily basis, that's my life right now, for may years that's what I've been doing on a continuous basis. And as a result, on a regular basis entrepreneurs come and pitch me their ideas and I work with them to help them understand how to take this idea forward, how to put one foot before the other. And I can't tell you how many times this particular scenario that I'm about to tell you about shows up in my life. Somebody will come in and say "Oh, I want to do this, "I want to do this app or I want to build this software, "software as a service, or I wanna do this website "and people are gonna use it in such and such ways.
"And I'm gonna get millions of users and the advertisers "are gonna start paying for it." Well, it's a long long process, and a very expensive process to get to millions of users for anything. And it costs a lot of money during that period, and it'll take you a lot of time, it's gonna take you 12 months, 24 months, sometimes 36 months to get to millions of users, and the question that I always ask is "How are you gonna finance that phase?" You know that 12 months, that 24 months, that 36 moths, how are you gonna finance that? Unless your one of the founders of Facebook and you're sitting on a billion dollars, then I don't question what you want to do, you can do whatever you want, like Adam D'Angelo from Quora is doing that, they don't monetize, they just let you, kind of, use their software for free, their platform for free, and they are, you know, they have been able to finance that journey, but most people don't, and you're gonna have to somehow figure out how to finance that journey.
The other piece that you need to keep in mind is that advertising rates really really suck. You get paid so little, as advertisements, it's just not viable, unless you have tens of millions of users, it isn't just not viable to make a living selling ads, and so there you have this chicken and egg problem, right, it takes a long time and a lot of money to get to millions of users, investors are not gonna fund you most likely during that period, until you have proven traction, and to get to proven traction is a long expensive process.
This is why, if you have dreams of getting to millions of users just like that, you need to really think very pragmatically about how are you gonna get there. And if you come to me, I will give you lots of very pragmatic questions and I'm gonna make you answer (chuckles). I would ask you what is the product? Who's gonna use it? And why are you assuming that people are not gonna pay for it? Why do you have to give this product for free? I'm not a big believer of giving things for free.
I think, you know, the internet has been hijacked by free riders, so my guidance to you would be, do not build a business with the assumption that you're gonna be catering mostly to free riders, because converting free to paid users is very difficult, and monetizing through advertising for all the reasons that I told you just now is also very very difficult. So my guidance to you, mostly, especially when you're bootstrapping a company is going to be, figure out what is gonna be you business model, what is gonna be your revenue model, how are you going to make money? What is your monetization part? And those are core questions that I'm gonna make you answer.