How would you compare product ideas?
I am looking at few strong competing product ideas for our next product. The factors I am already looking into are:
1. Expected short term and long term business potential
2. Competitor products, their market and platform valuations
3. Barrier to entry for new competition
4. Key applications where this platform can be applicable
The IP is probably not defendable but I will anyway check with my lawyers.
I am having a hard time evaluating proper business potential of an idea in Web 2.0 space.
How would you generally compare ad based revenue model with subscription based web service model?
Looking forward to your ideas and suggestions.
Good Answers (4)
Akira H
Startup Advisor & Managing Director, Cayenne Consulting LLC
Best Answers in: Business Plans (1)
Your best bet, in my opinion, is to cheaply implement and release free beta versions of all of your product ideas, and let the user community decide which one(s) you want to devote further resources to. Don't let the revenue model slow you down - you can resolve this once you have a user community. Don't waste your time on trying to do a lot of quantitative analysis before you launch, since this is at best a guessing game prior to launch. Just focus your resources on creating something of use to users, and get validation of your concept from the market - almost everything else (apart from IP issues, in certain circumstances) - is putting the cart before the horse.
Christopher B
VP Commercial Development at McGuinness & Company
Best Answers in: Customer Service (2), Change Management (1), Small Business (1)
If as you say you probably don't have defendable IP then there are several items that are key to consider. What are the direct and indirect costs of getting to market? Will it be so popular that competitors will jump in immediately? Will it pay off before competition floods the market? What are the clear advantages of a Web 2.0 platform? The above questions tie into your decision for ad based revenue verses subscription based. If you are expecting competition then whatever you can do to capture as much of the market as possible in the shortest amount of time is your best bet. Long term sustainability will depend on your product being the name that comes to mind when ever someone is looking for that type of service.
Robert H. H
Investment banking- financial consulting; FL, Caribbean, Central America; http://sophisticatedfinance.typepad.com
Best Answers in: Accounting (4), Venture Capital and Private Equity (4), Starting Up (4), Mergers and Acquisitions (3), Auditing (1), Internationalization and Localization (1), Offshoring and Outsourcing (1), Organizational Development (1), Planning (1), Personal Investing (1), Personal Real Estate (1), Small Business (1), Enterprise Software (1), Wireless (1)
First, I would add legal/regulatory issues to your list if you have user generated content.
To evaluate the ad revenue models this post by Will Price at Hummer Winblad might help (http://willprice.blogspot.com/2007/04/value-of-scenario-planning.html). On the subscription model I would do sensitivity analysis based on customer acquisition cost. Looking at the sensitivities of both models and expected IRRs might give you some real insight into which way to go.
If, as you say, the IP is not defend-able, then would look at two thing in particular.
1. What differentiates you from your competition today?
2. How will you evolve your offering so that you maintain a competitive differentiation?
Then, you can look at ad revenue versus subscription model. The key question there is: will your target audience pay for what you have to offer and how much? ...and will they be willing to pay longer term? If it turns out they aren't willing to pay or to pay what you want, that you will have a good indication of where to look.
