Build something people will pay for

Dharmesh Shah wrote a great post yesterday entitled “Web 2.0 Revenues: Charge early, charge often.” If you’re not subscribed to his OnStartups blog, you should be.

In this post, Dharmesh essentially rebuts Paul Graham’s theory that you simply have to “build something people want” and can figure out how to monetize it later. He makes the compelling argument that you should use the “release early and often” approach with both your product and your business model.

I would argue that you can really sum all of this up by slightly modifying Paul’s basic premise: “Build something people will pay for.”

Clearly, this is a rule of thumb. YouTube is free, and people really want it. In order to break even, they’ll soon need to charge $100.00 per year per user. There are certainly exceptions to this rule, but these companies are rarely profitable. They can be acquired for huge numbers, and it’s the stuff of dreams. But if you’re not going to build a top 100 web site, this is not going to happen to you.

file under: Blog, Startups