Questions to think about when monetizing your new product/service

During DC Startup Weekend, I asked one of the seasoned entrepenuers in the room if there were any tools in the market to help people develop a revenue model that exploits a product’s unique attributes. He said “no”. So, I am taking a crack at developing some tools which help business developer create a revenue model or monetization strategy. Here’s what I’ve come up with so far:

1) What specific added value does this product give to your customer (i.e. the end user)?

2) Would the customer be willing to pay for that added value? If yes, how much would the added value be worth? If no, why not (you may have a dud product)?

3) If the answer to question 2 is “no” or “not enough to turn a good profit”, what differentiating value could you provide to a third party (advertisiers, etc.) who wants to access that customer?

Based on these questions, would you add?

Wow… did I find something I don’t like about Google?

Today in TechCrunch, I read a post by Duncan Riley on Google dropping EnjoyPerth out of its search index because the firm sells text links to other sites. Since Google’s search rankings depend on the number of places a web site is linked, selling text links would hurt Google’s ability to measure a web site’s relevance.

In the post, Riley brought up a good point:

Overall though an interesting question arises, not just for EnjoyPerth but for all of us: is it healthy that we are all so reliant on Google. Are we better off for Google’s domination? would we be better off with stronger competition?

As much as Google is a user-focused company (and I certainly believe it is), lack of competition will make you comfortable and lazy. If selling text links is good for the advertiser, publisher (i.e. bloggers), and the reader (you and me), wouldn’t a user-focused company like Google want to build its search algorithm to accommodate this?

My Experience at the Startup Weekend DC

I’m coming up to the end of Startup Weekend DC, and we’ve launched a new product: HolaNeighbor. Here’s the press release from our marketing guys:

October 26, 2007 –WASHINGTON, D.C.– HolaNeighbor.com, a Web site that allows communities of neighbors to connect with each other, has planned, built and deployed a complete and fully-functional product in only 54 hours. Executed by a group of seventy, many of which had just met on the first night of the event, this initiative unites tech and business talent across the DC-metro area in a way never attempted on such a scale.

In addition to connecting neighbors with each other, HolaNeighbor.com allows for communities to exchange information, share upcoming events, request services, and provide insights into the current state of the community, such as crime reports and neighborhood watch.

The success of DC Startup Weekend signifies more than just the launch of a product in a shortened timeline. It is a community building a community, capitalizing on the depth of resources available in such a media-rich environment and focusing its efforts to make the area more accessible to residents, businesses and organizations.

Startup Weekend

Founded in 2007 by Andrew Hyde, the weekend is a concept of a conference focusing on learning by creating. It is known for its quick decisions, ‘out of the box’ thinking, unique facilitation technique and letting the founders show what they can do. The program has already met with success in Boulder, Toronto, New York, Hamburg, Houston, West Lafayette, Boston and DC and is expanding to 10 other cities. These cities include San Francisco, Boston, DC, Atlanta, London, Dublin, West Lafayette, Chapel Hill, Austin, Portland, and Seattle with more cities signing up weekly.

This weekend, I spent most of my time on the business development team with three jobs: 1) researching facts and figures for the team (my “differentiating skill”), 2) developing the revenue model, and 3) writing the pitch presentation.

Needless to say, I’ve learned a great deal, but I come away from the weekend with 3 general lessons learned about building a new business:

1. Consensus = knowing what battles to pick, and when to just shut up
2. When developing a revenue model, look for the game-changing feature(s) no one else has, focus on it to identify the distinct value it provides, and monetize it by seeing how much someone is willing to pay for it
3. You don’t need to be a software engineer to be valuable to a web startup

After this weekend, I also have the ability to monetize almost any web site and develop a VC pitch using my new presentation template All in all, I don’t think I could have had a more valuable experience, and I’m glad to see that DC has the creative, idea-oriented community I’ve been hoping to find.