Create more value than you capture

Jun 15th

Tim O'Reilly thinks the web is much bigger than search, and actually likes the Yahoo! deal. I think it is easy to overlook how Google is quietly winning marketshare in many non-search markets - and how they can easily build such positions using their brand recognition & distributed ad system. A throw away quote from Tim's post is the title of this post:

At O'Reilly, we always say "Create more value than you capture." All successful companies do this. Once they start capturing more value than they create, their market position erodes, and someone displaces them. It may take a while but it happens eventually.

Two of the easiest ways to ensure short term growth are to

  1. undermonetize to ensure you have a better user experience worth talking about
  • create some content that is easy to monetize aggressively, and leave most content clean and pure while only monetizing the most profitable content
  • use ad units that do not look or feel like ads, and/or ads that add value to the experience
  • reinvest profits into building content & social relationships that get network effects on your site
    • feature your best content so it is easy to find
    • interact in the community
    • ensure your domain name and design add credibility to your content
    • create interactive or viral components that raise brand awareness even if they do not create direct revenue streams
    Published: June 15, 2008

    Comments

    June 15, 2008 - 11:15pm

    Fairly straight forward: Give more than you take.

    For the businesses that don't quite get it right: We lose money on every sale, but we make it up in volume.

    I've always wanted to see what those accounting books look like. How do you know if you're going that direction? Test, test, test.

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