By Allan Maurer
Entrepreneurs keep coming up with new technologies, new web sites, new ideas, but what they really should be thinking about is evolving some new business models, says Eric Bleeker, Motley Fool tech analyst who oversees the site’s editorial team.
Bleeker joins tech luminaries such as Netflix co-founder Marc Randolph, OpenTable founder Chuck Templeton, National Venture Capital Association president Mark Heesen, National Seed and Venture Funds CEO Jim Jaffe, and NEA general partner Harry Weller, among many others participating in the Southeast Venture Conference in Tysons Corner, VA Wednesday and Thursday.
Right now, Bleeker says, “So many platforms are coming out that are dependent upon advertising. Yeah, they can get users, but what sort of platform lets you extract revenue from them?”
Zynga piggybacks on Facebook and other ironies
It’s ironic, he says, that game company Zynga can piggyback on a platform like Facebooks and monetize it at twice the rate Facebook does itself.
Similarly, the New York Times recently ran a piece on data mining that another news site picked up, put a more salacious headline on, and “Gets 50 times the pageviews,” says Bleeker.
The online music service Pandora, “is used on mobile 70 percent of the time, but only gets one percent of its revenue from mobile.” So new business models are necessary.
Bleeker believes quality journalism can still do well – pointing to “The Economist,” which is still managing to grow its subscriber base (and advertises widely online). Many local news venues may get squeezed out of the revenue streams if they don’t find new ways to make money, though, he suspects.
If it can’t command a premium, bye, bye
“If in the end, your product can’t command a premium, I’m sorry, but you’re going under.”
Quite a few companies are bridging that gap – along with many not doing it so well, he says. Companies with what appear to be successful models?
LinkedIn, he says has found a route: “Advertising is now a much smaller piece of their revenue than packaging business data,” he says.
OpenTable is another great example of an online firm that’s working, he suggests.
One problem he sees with many startups in the digital space – including mobile and hyper local, is that if they are ad dependent, the only exit solution they may have is to be acquired by the large tech firms sitting on billions in cash: Microsoft, Google, and Apple.
Apple, in fact, sits right at the top of the heap. “Apple is the big dog with the most money, but they don’t buy much,” Bleeker says. “They buy some intellectual property, but it’s not in their culture to bolt stuff on.”
That presents a difficulty if “The dominant player isn’t willing to buy.”
Apple, though, could be boxing itself in a bit with its emphasis on great design, the chunk of fees it takes for apps sold in its store, and its past DNA unless it finds ways to keep its customers. “They’re thinking about ways to lock folks in,” says Bleeker.
On the other hand, some estimates say that up to a mind-blowing third of global IT spending could be for computers (including tablets and Macs) in three years,” Bleeker says.
Sectors where Bleeker sees relatively unsung innovation is in networking and security, particularly from smaller firms. Catch what he has to say at SEVC later this week.