At lunch today, I was talking with a friend about building a viable online business, and focusing on the right things. I've worked for a lot of different online businesses, and I've seen some great success stories as well as colossal failures. So on the drive home from lunch, it got me to thinking about where it's best to focus, and what you should really worry about. I came up with a few generalizations.
The first thing is to not be driven by what you think the competition is. I'm sure MBA's would tell you that's crazy, but I don't think it is. Worrying about competitors is a distraction for a number of reasons. You can't control what they do, trying to be like them makes you a commodity, and worst of all, imitation likely dilutes your own goals and composite view. At the various gigs that I've had, I've been in on projects that sounded like, "What would [some other entity] do?" For the most part, few of these projects led to success or an improvement in the product. I started CoasterBuzz in 2000 with a rumor section, and I quickly found that it interfered with credibility and discussion quality. I only did it because someone else did. Today it'd be difficult to imagine having that "feature."
The second thing is to have real revenue that you can count on. Back in the Penton Media days, revenue was an afterthought when it came to the Web because, like every other form of media, it was seen as a "value add" to something else. If you aren't making money with your business, it's not a business. Are you listening, Twitter? Spending VC money is not a business. My business happened by accident, but truly had to become a business once the expenses exceeded hobby level.
Then there's the eyeball thing. A decade ago, everyone just figured that there was a connection between traffic and profit. While you need traffic to make money, the correlation between the two is not something that fits on a static graph. Chasing eyeballs is stupid. Chasing the right people who will be your customers, or consume your product in a way that's valuable to advertisers, that's smart. The Web creates mountains of data, and with that data you can figure out who is important and cater to them.
Iteration with measurable results is the key to growth. You have to be able to move fast, and evolve your online business so it keeps up with your audience. This is more of a personal lesson than anything in my case. I let CoasterBuzz suffer literally for years, and watched traffic and club memberships slowly decline. Over the winter, I finally started engaging the data and learning about what people did to bring focus to their actions, and I've been seeing 10 to 20% growth month after month.
You must trust in people. If someone works for you, they're not of much use to you unless you trust them to act relatively autonomously. Give them a stake in what you're doing, and they'll do the right thing most of the time. This isn't necessarily an online thing, as it applies to all types of businesses, but it's very frequently disregarded when the business is seen as just this thing in a Web browser.
Finally, you have to be willing to fail, especially when it comes to doing something new. That's why it's so hard for me to engage in new stuff, because I don't want it to fail. Without risk, there is no reward. One gig I had involved a bleeding business, with no vision, and a completely unwillingness to try anything new. The fear was crippling.
These ideas have served me well, even if I don't always stick to them. Hopefully they work for others as well.
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