I get a little worried that new entrepreneurs will take the message form the movie about facebook that you should just build something cool. Maybe, the guy who worries about the money is an outcast? It is clear early on that facebook could not monetize until it had millions of users. Trying to sell ads early would have been distracting and useless. The company had to get to significant critical mass to monetize and I doubt very seriously they did not know this fact.
I don’t believe that anyone in a company should take the approach of not worrying about money. You must have a cohesive strategy to make money and it may require building something cool that attracts millions of users so it can be monetized.
Even a few million users alone do not make a company. Take a look at Plaxo in 2004 – it had millions of users, but no way to monetize. It took a new CEO to come in and refocus the company on making money that led to a successful exit to Comcast.
I think most will find that the venture community will not open its doors unless you understand your economic model. If you want to get funding – you have to deeply understand this – cool only sells if it is attached to money..
Thoughts?
