1,000 Clients or 1,000,000 Fans
Posted on 26 May, 2009 at 18:46 PM
There are already 28 Comments
About the Show
David and Marc question the general consensus on the web today by sharing their views on the oft hyped-up Freeism culture adopted by so many new firms searching for VC’s.
They also bring some pancakes into play following literally three requests to see Pancakes on From the Couch.
Speaking of Freeism, here's a pancake recipe.
Links mentioned in this post:
- When 1.3 Billion People are too many
- The App Store Hype gets a Dose of Reality
- The Incredible App Store Hype
Related Shows
- (8) Episode 186 - Apples and Oranges
- (25) Episode 184 - Murdoch vs. Google
- (6) Episode 183 - Social Media Ends Outside
- (20) Episode 182 - One Year Anniversary
- (7) Episode 181 - Social Media Etiquette and Making Money Offline
User Comments
David Perel 26 May, 2009 19:04:59 PM
@Divinefusion - Nice one ;) That is one department where we #fail at... business cards. We have had a business card since we started Obox Design.
kyle steed 26 May, 2009 19:05:41 PM
Go right ahead with your ranting. I love it. Supporting small/local businesses is far better for our economies than the mega-millionaires who sit atop corporate ladders.
This is my problem with many companies including the likes of WalMart and Microsoft. And while WalMart really has nothing to do with the internet culture, their basic business practices effect us all. And then Microsoft just stinks, they continue to make poor decisions and poor quality products. Have you heard of "BING" - it's supposed to be the new MSN Live Search rebranding. What a joke.
Sorry, enough about that, let's talk pancakes. I love me some pancakes, especially made-from-scratch pancakes with butter and rich maple syrup. YUM! I think that's what the squirrel was after. :)
divinefusion 26 May, 2009 19:12:09 PM
@david seriously? I handed out 500 cards in 1 year! They are so important, and cool ones get you noticed & remembered. Plus you can leave them in places where your clients go on a day-to-day basis.
Marc Perel 26 May, 2009 19:14:58 PM
@Kyle - The pancakes were fresh, they made them right in front of my eyes.
@David - At least the whole world doesn't now judge us on the basis that we don't have any business cards. Due to your blunder the ramifications could be dear. Your admission has the possibility to subsequently affect From the Couch, Obox Design and all our other brands in a negative light, leaving us, for want of a better term; screwed ... Tsk Tsk!
divinefusion 26 May, 2009 19:17:36 PM
@marc what is stopping you Mr designer dude!? Self promo time :p
Rob MacKay 26 May, 2009 19:17:50 PM
mmmm I'M sure there was a point to that video - all I could see was pancakes... *drool* good job...
But on a more serious note - I do agree, its not a good business model. I think having free things to gain interest or traffic isn't a bad thing, because its pretty much advertisement of your brand... The more people that know about you, the more chance you have of meeting a client out of them.
I think this idea can be pushed a little too much over the top though, people giving 100%, then their readers expect everything from them for free. If you started charging for things suddenly they would be uproar from half of your community anyway.
Everyone needs to make a $, and unless you can do something full time for the love of it - because you have already made a $ or two, then that's great. If not yes we do need to think about how much time we are spending on things that will not gain us anything.
I think Woo-themes is a good example of the right way to do it, they have a few free examples of their work letting you try before you subscribe. People see the quality, which is what you want a free product to do, and then decide that the product is worth paying for.
leaning on AdWords to make you rich is a pipe dream. end of.
Thx for the mention guys :)
Marc Perel 26 May, 2009 19:23:33 PM
@Divinefusion - Ha ha, Marc's not a designer by any means my dear ;)
@Rob - 100% on all your points there mate (yes I did read them!)
Glad you guys enjoyed the pancakes!
Nick Roach 26 May, 2009 19:52:19 PM
Fans vs customers...I guess it depends on what you want to do with your money. Money is nice because you can *do* things with it, but you can also do a lot of great things when you have a big enough following. Facebook may not be "profitable," but it has also affected the lives of millions. I think that influence is just another form of richness.
Marc Perel 26 May, 2009 19:55:30 PM
@Nick - Great point mate, I think Mark Z can wake up quite proud every morning with the thought that he's pretty much changed the world!
David Perel 26 May, 2009 22:02:29 PM
@Nick - Excellent angle that you have taken, I like it. But I am looking at it from a pure capitalist point of view, at the moment money is still what makes the world go round and our Internet culture creates jobs but it is also destroying jobs, eg: the print industry.
Print has never been evil but it's now murder to charge for information... So I think there is still a floored logic in how we are measuring success in the web world and that will affect how we go about business in a tangible space as well.
One day everyone who works on the web will be giving stuff away for free but wont be able to buy milk because 'Isn't everything for free?'
"Don't I get to have a 30 day trial of your milk before I buy it?"
Now I know I am taking it to an extreme here but I hope you see what I am saying....
Mike Conaty 26 May, 2009 22:06:42 PM
Thanks for the mention guys!!! (and now for my @garyvee moment: It's Con-ugh-tee... it's an Irish thing... no worries though, it's the most mis-pronounced 6 letters ever, everyone says co-natee :-D
Anyway, I've had my share of potential clients who's only plan for monetization was Google Ad Sense... which is like not monetization plan at all. There are a million get-rich-through-Google-ads websites out there, yet none of them ever seem to go beyond the write a blog/start a service, get a million users, make $$ with Google ads model.
It's always the hardest part of dealing with potential web dev clients... managing their expectations... worse than managing the expectations of the folks who come to me and say "I want to make a viral video". :-}
David's right, the culture on the internet these days demands free content, leaving the monetization to Google ads, however, many of the users out there demanding free content are the same ones running ad-blocking software. There has to be a better way, but until a better model is developed, paid content or site subscriptions are they way to go.
Cheers, Mike
Ryan Downie 26 May, 2009 22:45:40 PM
You guys make some good points here, but to answer the question in the title 1000 clients or 1000000 fans for me it's clients. We are all here to make money and if people say they are not it is a lie.
Also I wouldn't want the overhead and pressure of catering the needs and content updates for 1,000,000 people. I would rather make enough to live a nice life (as the sole coffee maker) then have all that pressure.
Regarding the internet culture it is pretty sad to see where it has gone, with everyone expecting everything to be free but that's due to the success of the internet. Also take twitter for example, would you pay to use it?
Gavin 26 May, 2009 23:57:18 PM
@David - I was recently at a conference in the North East, UK and one of the questions was "Would you pay for Twitter?"
The answers from the auditorium sounded like a "Hell NO!" to me, so if no-one pays then they'll wait for something else to come along, but they'll still want it for free? However flipping that on it's head, you see people paying $20 a month to be apart of crazydating.com etc yet they'll not pay for Twitter or Facebook etc etc.
@Ryan - I see your point exactly. Personally I'd like the 1000 clients so then I can sit back and enjoy the 1million fans.
Would I pay for Twitter? I would pay for anything that adds value to my life/business.
Ryan Downie 27 May, 2009 00:09:23 AM
@Gavin I personally would pay for twitter as it has gotten me some good freelance leads. But on the other hand if twitter was a paid service a lot of its value as networking tool would diminish. It would become more of a shorter version of linkdin etc.
I have been having a good conversion with David over email about this, as to the conclsion I have come up with is that the big sites like facebook, youtube etc who are losing money on the face of it are not. They are promoting brand value and that costs just as much if not more then offline. Coca Cola for example spends ten of millions of pounds per year on advertisement to get you to buy Coca-Cola compared to Google spending millions to keep their products ticking over and hoping you will use the search engine for searches.
I just used Coca-Cola and Google as examples and this can be used on most of the main sites etc, they all want something in return. Links clicked, Items bought etc so is the web as really free as we think it is?
Peter Bernardo 27 May, 2009 00:14:07 AM
I think what is often the problem is that people don't envision their small project getting so big to where it becomes a business. Twitter and Facebook were basically side projects, I would also not rush to assume that they haven't considered or know how to monetize. They probably have many many ways to do it but choose not too till they find/setup the most optimal. Twitter could easily include an ad with every 50th tweet like many apps do, I just think they understand that that might not be the best way to make money long term. Ultimately that is the point when you consider 1k clients vs 1mil, anyone of those startups could flip a switch on something that only converts 10% of that audience and now they have 100 times the client base of the 1k guy, but I think their goal is how do we convert not 10% but 90%.
In terms of Google not having much revenue without search Ad profits, I think that is a rather silly argument when that is their business. That would be like Ferrari not selling cars, sure they make money off merchandise but their business is making cars.
David Perel 27 May, 2009 00:24:58 AM
@Peter - You are 100% correct about Google but what I was saying was that even with 1billion users the majority of their revenue still comes from one model, which is advertising. Not every startup plans on using advertising as their revenue model (eg Twitter).
You can't have Google without having Google Ads but I am just saying that from a money making point of view having 1 million users in not necessarily the answer and in a sense Google proves it with a site like YouTube, which is quite ironic.
That is why I would prefer 1000 clients to 1million fans.
Am I making sense? My brain is starting to switch off (its almost 12.30am).
Sean 27 May, 2009 00:59:53 AM
Definitely 1000 clients over 1,000,000 fans. $$$ pays the rent and buys food. Fans just pimp my ego (well they would if I had any).
re: free stuff on the internet. I'm of two minds on this one. Free does not equal quality. In web dev I use ExpressionEngine which has a $250 license. In the grand scheme of things for a client site that's a relatively small portion of the development costs buy many developers won't consider anything that isn't free because it adds too much to the cost of the site.
I disagree with that. That $250 license saves me money as ExpressionEngine is much easier (and more flexible) to develop with than Wordpress or any other opensource CMS I have used. The result I get save more hours of work by spending $250 than I would by using opensource. Also have you tried getting any sort of support on wordpress forums - it's like pulling teeth. No problems with paid software because they have people who are paid to provide support.
On the flip side if every free service charged $5 or $10 a month it would be too expensive to be able to use all the services I would want. Re: twitter if twitter was a pay service I probably wouldnt' have tried it out because at first I thought it was pretty stupid, but now I find it incredibly valuable and would probably pay for it.
what I'm trying to say is that you get what you pay for. Free isn't always best, but neither is pay. Some services just won't be able to charge for subscriptions. I can't see facebook users being willing to pay for membership.
Sean 27 May, 2009 01:01:07 AM
Ack... looks like I typed my email wrong and my gravatar didn't connect to my comment.
divinefusion 27 May, 2009 08:00:25 AM
Very interested collection of comments here. So lets think forward. What does Google have up its sleeve? How will adsense change in the near future, how do 'information' based sites survive? Why have we created a culture where we want to access information for free? And how can we change this culture to become more profitable?
Adam 27 May, 2009 12:17:30 PM
First - AdWords is the program where you pay google to serve your ad. AdSense is the program that lets you use the ads from AdWrords on your site.
Second - you're so right. I get three people a week coming to me with the "next facebook" etc, selling me a great idea to drive butt loads of traffic, with no monetizing plan.
On the other hand - I wouldn't say you're wrong, but I would say "don't despair" to the dreamers. There are ways to monetize apps, there are lots of AdSense success stories (I'm actually making a nice passive income of of it), and there are lots of business models to discover.
Our problem as creative people is quite often we focus on the creative/fun side of ideas and apps, instead of thinking of the (not-really)-boring-gray side of business plans, monetizing, etc.
I (really) wouldn't want to be Mark Zuckerberg these days (unless he really knows something the rest of the world doesn't).
liam 27 May, 2009 15:31:27 PM
This is how I see it:
If you're looking to make money from selling a product, or a service. Then it's harder to build up a following of millions - and you don't really need to aim so high, you could easily get by with a smaller audience, and a smaller client base.
But if you're relying on something different to generate revenue, then the number of fans and visitors really is important. Google has millions of fans, because it's free and easy, so they have to look at ways of making the most of those users without scaring them away. Lets say Google decided to charge for it's service & it was going to cost $2/ Month, they would lose a lot of fans I'm sure. Less people would use it, they couldn't demands as much money from ad sales - and relying on the $2/ Month subscription fee wouldn't make up for their losses.
So as their biggest selling point is their audience, they need to look at ways of increasing their audience, and fans. So they bring out some other services, all to grow their fan base and bring in more fans. So although the individual apps and services might be losing money they are making it back because they are expanding their name, and their visitor numbers.
If Google didn't offer all of the different apps and services they do, they would sacrifice Ad revenue in the long run. So while they might be at a loss with the apps they don't really lose out at all.
Thats how I see it. And I think for me, doing what I do having a massive following isn't important, as my business doesn't rely on having loads of fans, and I don't really have any way of making any money from them if I did have, so definitely clients over fans for me :) But I can see why some companies would have it the other way.
Interesting discussion!
Sam 28 May, 2009 00:31:12 AM
I think when it comes to Google, you have to keep in mind that we're Google's product. The users. They sell us to the various advertisers, and all the Google apps are to keep their product happy.
Tyler Reed 28 May, 2009 01:43:56 AM
Seriously, I can't stop laughing at this video! You guys went all out and I fully agree, I would rather have less paying customers than more fans. However, I am going through this at the moment and I thought I would share my thoughts and point of view on the whole charging vs. free debate.
While I sincerely believe that there are start-ups out there that are pointless and are burning cash, there others out there that are really making a difference. Entrepreneurs start a business to obviously make money and earn a profit, however your business needs to satisfy a need before anyone would be willing to pay for your products or services.
In a lot of cases, we see that a lot of these new start-ups need to first create the need with minimal barriers of entry to their target market. In context, when Twitter first launched, do you honestly believe you would be able to determine how much you guys would end up relying on it and be willing to pay for it up front, without knowing how useful is has become to your business? I am going to assume for the general population that the answer would be no.
Twitter needed to build up the subscriber base before it became relevant to anyone, as with YouTube, Facebook, et al. No point in being on Facebook without any friends right? You wouldn't pay $1 a month to tweet to nobody, but I am sure you would now! So what I am saying is sometimes we need to create a market before we can charge the market, this does require cash burning.
On another point, besides creating a market. If these products weren't available at little or no cost, we would seriously be losing out on some innovation and creative thinking. If video on the web never took off because YouTube and it's rivals all charged, you guys might not have been able to expand your business. I might not have been able to communicate with my friends, families and meet guys like you from the comfort of my own home. So we also need to appreciate the innovation, creativity and change this has brought to our lives.
In terms of the internet culture killing other industries. I don't believe traditional media will die, I once did. However, I know believe it will all evolve into one media in years to come. Although we must not forget, many industries have risen and fallen over the many decades and centuries. Retails stores killed the small man one the corner. Jobs will disappear and new ones will emerge.
Now in terms of my own personal thoughts and experiences as an entrepreneur and someone who is going through this at the moment. I have a vision and set goals to achieve that vision, there are many routes I can take to achieve this vision, each with their own pace and rewards.
Other than making money, which I really do want to do! I would also like to make a difference in this world, I want to be able to in some way or form affect other people's life in a positive way.
Without giving too much away too early. All I can say is that in this new age of business where technology allows you to access a much broader and larger market, there are certain methods in which we can offer products and services as no or low cost and still make a profit. It all depends on the business models and markets you create!
Talya 28 May, 2009 12:41:24 PM
The saddest thing of them all, is that these are all really creative and intelligent people who came up with Facebook, Twitter, Google etc. yet the only way they can think of to monetize their "business" is by selling advertising space. So the business model has now just become, find a way to get a billion eyeballs onto your site and then your revenue stream is from GoogleAdsense. It is so wack.
They should have instead focused their energies on coming up with creative and new ways to build their actual business, as something that consumers actually want and need and would be willing to pay a premium for. I think the problem comes in with the fact that they let you have it for free - forever, rather than like Flickr who cleverly let you use the vanilla model for free, which gets you hooked and loving it, and then if you are a professional photographer, or want to use all the sprinkles - bells and whistles you pay a premium annually, they have also come up with clever ideas on how to sell and package what they are already doing, and in terms of earning revenue off their actual business they must be kicking Google, Facebook ass - as all they sit thinking about it how to get more hits to sell more advertising space.
Something like Facebook Events should never ever have been free! If you are having a get together/birthday party etc of less than lets say 50 guests, cool they should have let you been able to 'organize' and invite friends to lets say 5 events a year. However if its a huge party/show, they should have charge the organizes $10 an event, they could have made a fortune, because event organizers would have been willing to pay for that.. ah I could go on for days..
Eyeballs and advertising your own business are extremely important, but selling prime space on your website as your only revenue stream is just extremely silly and oh so web1.0
Johan Swarts 14 Nov, 2009 19:04:18 PM
This is one of the most sobre views on all the hype I've heard in a very long time. Kudos, guys.
Now I'm hungry.
Elmo 30 Nov, 2009 04:37:06 AM
Dudes,
I really love this Vlog.. er ...Blog...whatever. I just listened to an interview by this guy that wrote a book called "Your Marketing Sucks" (As a matter of fact, that is the title of his website too) and he said many of the same things you just said as well.
I think a main element missing from businesses these days is the human factor. You dial up a big company here in America and you get this huge menu that you have to listen to. People don't know who they are dealing with because nobody really cares.
However, for people like us, this is a great opportunity to connect to our client base on a much deeper level. Just because the massive companies and their billions are acting like complete morons by ignoring everyone, it doesn't mean we have to. First of all, it ain't right and second we can work closer to the people we service and deliver the goods to.
Anyway, great Vlog...er...Blog God Bless! Mark Elmo Ellis
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divinefusion 26 May, 2009 19:00:32 PM
ahahah, was the squirrel hunting for pancakes?! Marc, thanks for teasing us with your rolled pancake :p Great post. I agree, I would rather have 1000 paying customers than 1mil fans. I always hand clients a handful of business cards and ask them to refer me if they liked working with me...and it pays off, I 98% of my work is referral and I've had several people ask me for more cards (to hand out). huzzah!