The new rules for online success--the reverse ten-bagger

Summary:Online companies will lose if they get too greedy.

My apologies for quoting myself (it is a terrible habit I've picked up as a blogger :-) but the other day I wrote a piece about the "reverse ten-bagger."

Steve Gillmor panned it (without a link back :-( , but, that's okay, it is not for everyone. But I was wondering if my ZDNet IMHO readers might see some value in it.

The reverse ten-bagger is as follows:

Old rules: A successful internet-based company was defined as one that was a ten-bagger--it returned ten times or more value to its venture capital investors.

New rules: A successful internet-based company is one that monetizes ten per cent or less of its clicks and page views. Otherwise its community of users will see it as money grubbing and exploitive, and will avoid it.

. . .

VCs are always firing up their spreadsheets around Craigslist and Wikipedia and other community sites, and noting that there is a huge amount of money being left on the table.

Well, leave it on the table is my advice. Craigslist is barley monetizing 1 per cent of its traffic and that is absolutely fine by Craigslist--and its users.

As an entrepreneur, the way to achieve enduring online success is to give back, to give back value, huge amounts of it. Don't worry, you'll still be able pay the bills.

Topics: Enterprise Software


In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to become a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley. Tom arrived in San Francisco in 1984, and has covered US technology markets for leading comput... Full Bio

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