Revenue Snobs

A couple of years ago, Meetup announced that it was going to start charging for its group organizing services. Almost instantly, they lost half their groups. Once the fallout passed, however, something amazing happened: More and more groups started paying. Soon they had more Meetup groups than when the site was free, which actually improved the overall service. Now, when you find a Meetup group, you know that it's at least active enough that someone is paying 18 bucks a month for it.

Having come from a venture capital firm, it turns out that I have a previously undiscovered bias towards cutting edge, sexy business models--which Meetup is not.

I'm a revenue snob.

Google has a sexy business model. People search, others advertise against those searches...very slick. Sermo's business model is ridiculously hot. Doctors come together in a community and pharma and Wall St. pay to watch. That's almost porn-worthy it's so sexy.

So when someone like Zoominfo comes along and charges for access to its people search--you know Zoominfo, that half wrong profile of you that confuses you with that media sales guy from Kalamazoo--I had to admit I turned up my nose...

...until I saw that they were making 15 million in sales. Yes, that's right. Zoominfo is doing 15 million in sales selling $349 annual subscriptions to its database. It's easy to dismiss a company like that, because the data quality is so poor, and if you're a VC trained data snob. If you understood anything about recruiting, which is essentially a lead gen business, you'll realize that a lead doesn't have to be 100% perfect to have some value--especially if the payout is a big recruiting bounty.

It really hit home when I was talking to an investor yesterday about Path 101's Resume Genome Project. I was talking all about how having this rich database of data will enable next gen recommendations and encourage users to contribute more data, and the investor simply asked, "What about searching the 8 million resumes you'll have in your database day one...isn't that a business?"

Yeah, actually, it is. It's not super sexy, and other people could do it, but the market is so fragmented that anyone with some scale of profiles has a business. It's the same in the jobs business. Name a company that only wanted to be and only tried to be a job board that couldn't generate revenues. It's the companies that tried to be some kind of fancy matching thing first, like ItzBig, without solving employers and job seekers immediate problems first, that went under. It's what David Kidder recently referred to at a nextNY event as "getting in the jetstream of revenue"--finding out what people are paying for right now and making that part of your business plan.

So perhaps before you try to be better than your competitor as a startup, you might try being just as good--because just as good can mean revenues and next gen can sometimes mean too early. What you'll likely find is that a focused startup's attempt to be just as good actually results in a much better product that people might even be willing to pay for.

You know who should think about bringing their noses back down to earth? Facebook. Does anyone not think that there could be some kind of premium feature set that a quarter of the population would pay five bucks a month for? I'd pay to see who viewed my profile for sure... or certainly for stats on views....or for no ads and application notifications.

So before you go for the wacky virtual click per social micropayment model, perhaps "I make a product, you buy it" should at least be thought about.