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Author Topic: What would it take to create and then sell a very successful website?  (Read 6444 times)
superboyac
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« on: March 23, 2009, 11:38:23 AM »

A friend of mine recently came up with an idea for a website that he intends to sell down the line for hopefully millions.  As usual, I'm the downer in the group and am hesitant to offer encouragement.  Only because I've been through my fair share of ideas and I know that the details of it is always hairy and the probability of success is ridiculously low.  At the same time, I also know that I know barely anything about this stuff, so I turn to you guys for advice.  So, I have a few fundamental questions about all this, some more philosophical, some practical, some naive.

--Firstly, has the time passed where you can sell websites for millions, a la youtube, facebook, myspace?  The reason i ask is because of issues like these.  I suspect that it is much harder to do this relative to 5-10 years ago.  Especially considering the economy for the next 2 years.

--Next, my assumption is that you can't make millions unless you create a website that is going to make someone addictive and visit it multiple times daily.  As in, a regular person (not a geek) will want to go to that website like an addiction.  For example, youtube...I probably watch youtube more than regular TV (I really don't watch TV at all, but you get the point).  So, if everyone is going to youtube multiple times a day, that's just insane.  Same with facebook, everyone's on it all the time.  Even if you have a really great idea for a website, unless it becomes addictive like that, it won't sell for millions.  many of the ideas I hear are really good, but only temporarily...like, they'll help you for something you're trying to do, but after you do it, you're done with it, and don't have to return to it for a long time, if ever.  Think of it like a thread on this forum:  you ask a question, you get a lot of activity for a while, and then the question is resolved, and the thread will get visited once or twice a year from then on.  That's not going to make a lot of money.

--Also, in my opinion, another reasaon why youtube was so popular was because of the illegal content and the way they handled it.  youtube was not the first website to offer putting up videos.  yahoo, google, and others tried doing it before, but weren't nearly as viral as youtube.  Why?  because they were so very concerned about copyrights from the get go.  but youtube let anyone put up anything (easily) right from the start, and dealt with the copyrights later, which turned out to be well after everyone was already addicted to it.  you see the subtle difference?  I mean, honestly, probably 90% of what I watch on youtube is copyrighted material, but it's all there.  That's brilliant.  instead of protecting themselves and restricting the material from even getting there, youtube put it all up, and took it down later as the complaints rolled in.  They're not officially advocating putting up copyrighted material, but they allow it because they allow everything (except porn).  it's the users who are uploading the copyrighted stuff, not them.  Anyway, it's a very strange and fascinating ethical scenario.  if youtube quickly and efficiently removed all copyrighted material, it would destroy the website.  My point here is, from a business standpoint, if my friend could accomplish something like that, it would be amazing.  That is, create a website that would permit illegal content to proliferate without deliberately creating the website for that specific purpose.  Sly.  (not that I promote it, I'm just theorizing).

Those are my initial thoughts.
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EĆ³in
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« Reply #1 on: March 23, 2009, 11:55:23 AM »

Don't forget costs. Hosting a popular website is very expensive.
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superboyac
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« Reply #2 on: March 23, 2009, 12:25:18 PM »

Don't forget costs. Hosting a popular website is very expensive.
Well, apparently the idea is to get some venture capitalists to buy into it after spending a little to get it going.
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zridling
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« Reply #3 on: March 23, 2009, 12:35:07 PM »

Ask your friend to detail what the site's revenue stream will be. In other words, how exactly will it make someone money? In most instances, it's much cheaper for a company with capital just to rip off his idea and launch their own version of the site, assuming they get in on it (e.g., compare YouTube's content to Hulu.com's various network deals). As you've noted, just about every essential avenue on the web is covered, unless he can give them what they can't get elsewhere, such as uncensored content.

For example, anontalk.com allows you to write anything on its forum as long as you can use decent grammar and spell. We all know most places pre-censor content and ban the hell out of your IP address if you happen to write something they don't like.

Finally, do a google search of the history of failed website ideas and review it with him. Just because a guy has a law degree and passed the bar exam doesn't mean he can make a living by hanging a sign on the sidewalk and expecting clients to walk in the door. Lots of people became internet billionaires in the late 90s tech bubble because the idiots on Wall Street thought they could make money online. Turned out that Amazon could, but that was about it.
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superboyac
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« Reply #4 on: March 23, 2009, 12:39:46 PM »

Ask your friend to detail what the site's revenue stream will be. In other words, how exactly will it make someone money? In most instances, it's much cheaper for a company with capital just to rip off his idea and launch their own version of the site, assuming they get in on it (e.g., compare YouTube's content to Hulu.com's various network deals). As you've noted, just about every essential avenue on the web is covered, unless he can give them what they can't get elsewhere, such as uncensored content.

For example, anontalk.com allows you to write anything on its forum as long as you can use decent grammar and spell. We all know most places pre-censor content and ban the hell out of your IP address if you happen to write something they don't like.

Finally, do a google search of the history of failed website ideas and review it with him. Just because a guy has a law degree and passed the bar exam doesn't mean he can make a living by hanging a sign on the sidewalk and expecting clients to walk in the door. Lots of people became internet billionaires in the late 90s tech bubble because the idiots on Wall Street thought they could make money online. Turned out that Amazon could, but that was about it.
Very interesting, z.  So, are you saying that the time may have passed for making a fortune from social networking websites?  Obviously, we can't tell for sure, but is it significantly worse than it was before?  It's my hunch to say yes.

(by the way, you're new avatar is so cute, it's almost sickening!)
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40hz
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« Reply #5 on: March 23, 2009, 12:52:25 PM »

I think the key issue is what value is being offered by the website.



There are thousands of great ideas. But not all of them are viable as businesses. That's why we have charitable organizations and government. Those are the institutions we've created to provide needed services that don't make sense from a business perspective.

About once a week somebody suggests to me that I really "need" to start offering in-home tech support for people without much technical knowledge or money. "There's an incredible NEED for somebody to provide that." I'm told. (That much I can agree with.) But then they show how little they understand business by concluding: "You could make millions doing that."

Hmm...let me see...I should start a business to provide onsite hand-holding to 'high maintenance' clients that don't have a lot of money to spend...


See the problem? It's a nice idea - and it addresses a genuine need - but here's no business there.

-------------
BTW: Don't be afraid of being the nay-sayer. The age old business questions will always remain, no matter what market you try to enter: Who is going to buy your product. Does anybody want it? Does it address a significant need? How will people pay for it? How can you protect your product from competition? yadda-yadda

Old joke:

Q: How do you make a small fortune on the Internet in just 90 days?

A: Buy our book - and start with a large fortune. tongue


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« Reply #6 on: March 23, 2009, 12:55:06 PM »

You need to stop thinking that this is about a website. It is about a service provided through a website. So it depends on what the service is, how popular it gets etc. And since entry costs for most such services are very low, you can expect a lot of competition fairly soon after starting if it is seen to be popular: so it is important to do it better than all the rest. Myspace et al reached the level of market 'dominance' by having the image and perception and the market share - and that made entry costs very high for potential competitors; not that Facebook was held back by that.

I don't think the current state of the economy is a major factor. If a site becomes fashionable it can do that just as easily in a recession. People may be less keen to rush out to invest in it but it would be a good few years before something built up enough head of steam to attract really big bucks.

The real problem (possibly) is the seedcorn money. If the idea is for something initially more expensive to provide than any advertising income that can be raised (eg Youtube server farms etc) then the amounts of money looking for website homes are much smaller than they were. Money will certainly be needed to fund staffing etc if the business starts to grow fast, but there will always be investors interested in fast growing businesses. Though they may want a higher % stake than in the boom. And these investors will not be interested in buying the business, just funding expansion for a hefty share.

It is also an area where change is rapid so things have constantly to be driven forward to avoid going stale and income dropping like a stone (though usually this happens after being bought out rather than before).

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40hz
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« Reply #7 on: March 23, 2009, 01:10:34 PM »

Of course there's also that tiny little detail about how to prevent others from just taking your idea and running with it if it proves viable. Especially if they have deep pockets.

I do think the era of Internet Cinderella stories is pretty much over. You have too many well-funded and technically adroit companies actively monitoring just about everything that's going on for there to be much opportunity to slip below their radar.

YouTube, Yahoo, and all the other success stories made their mark before the 'big boys' caught on. The Big Boys won't make that mistake again. Look at online movie delivery. All it would take to sink Hulu is for the movie studios and TV networks to decide they would only allow streaming from their own sites and Hulu and the rest of them are doomed.

I think you'd need to come up with something totally unique and unintuitive before you stood a chance of creating a new multimillion dollar web niche.

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superboyac
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« Reply #8 on: March 23, 2009, 01:47:45 PM »

Of course there's also that tiny little detail about how to prevent others from just taking your idea and running with it if it proves viable. Especially if they have deep pockets.

I do think the era of Internet Cinderella stories is pretty much over. You have too many well-funded and technically adroit companies actively monitoring just about everything that's going on for there to be much opportunity to slip below their radar.

YouTube, Yahoo, and all the other success stories made their mark before the 'big boys' caught on. The Big Boys won't make that mistake again. Look at online movie delivery. All it would take to sink Hulu is for the movie studios and TV networks to decide they would only allow streaming from their own sites and Hulu and the rest of them are doomed.

I think you'd need to come up with something totally unique and unintuitive before you stood a chance of creating a new multimillion dollar web niche.
I lean towards this view as well.  But like i said, I'm just pessimistic like that.  But, I've been proven right too many times to believe differently.
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« Reply #9 on: March 23, 2009, 02:16:16 PM »

Hi, I am superboyac's "friend" with the idea, and I appreciate all the feedback and advice you guys have provided. I'd like to clarify a few things so you guys can tailor your advice.

1. The website does provide an unique service. There are websites that provide a similar service, but in a very general, somewhat helpful way. The idea is to provide more specific information and advice, and thus be more helpful.

2. The service is very closely correlated with the job search/career-development market, and since that market is going to be booming for the next couple of years, it seems its a good time to do it.

3. I already have a virtual private server that is of no cost to me. It will not require nearly the bandwidth facebook or youtube requires since most of the site is text, and a few small images.

4. Competitors, naturally, are an issue in any scenario. However, the first mover advantage is huge, and would take a lot for another company to catch up, since the content is mostly user-submitted.

Let me know what you guys think.
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mouser
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« Reply #10 on: March 23, 2009, 02:57:26 PM »

I have become very cynical about what i perceive as the almost insurmountable problem of getting exposure for good ideas.

Unless you have a couple million dollars to spend on advertising, I would worry very much about how to get the word out.

One of the biggest frustrations i hear from people trying to get new websites off the ground (whether commercial or not) is how to get the word out about their site.

I'm afraid that in the current world, a vastly inferior product with a lot of money to spend on advertising will easily bury and doom a much better product with no advertising budget or pr department.

People go into these things thinking: if it's a great product, people will flock to it.. i wouldn't count on that.
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40hz
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« Reply #11 on: March 23, 2009, 03:36:42 PM »

Let me know what you guys think.

I'm pessimistic. And I hope you prove me completely wrong. Grin

I wish you the best of luck in your venture. Thmbsup

 smiley

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mouser
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« Reply #12 on: March 23, 2009, 06:04:28 PM »

The other way to look at it of course is, if you can figure out a way to create it without spending much money, give it a try -- what is there to lose?
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superboyac
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« Reply #13 on: March 23, 2009, 07:21:26 PM »

Unless you have a couple million dollars to spend on advertising, I would worry very much about how to get the word out.
I thought about this also, but I didn't know exactly how much money/time/effort is involved.  i suspect that less of one would involve much more of the other.  I've read before that for blogs, for instance, to make it really popular (enough to make a decent amount on advertising) you need to spend a lot of time advertising it on forums and so forth.  it turns out to be a full time job and only works occasionally, if you're very lucky.  I think i read this on Problogger.

But if gary1095 can put in the necessary legwork and that amount of legwork turns out to be enough, then yes, it's a good idea. 
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« Reply #14 on: March 24, 2009, 05:48:54 PM »

At first I thought that you must be talking about domain names, not actual web sites. Extremely few people have made it big with a "web site", though there was a time when many became wealthy by buying up domain names and then auctioning them off. You can't do that easily anymore for any trademarked, or even just famous name, though a few celebrities have recently sued and lost to get back domain names with their names in them.

As for an individual starting a social network, forget it! All of the current "biggies" started out with major investments and have picked up even more since then. It takes at least a couple of million dollars (US, anyway) to get a site off the ground and keep it going until it can start pulling its own weight.

Jim
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« Reply #15 on: January 03, 2010, 05:58:54 AM »

Not sure this would help but I recently found this on WordNik's News Page:

How 20 Business Ideas Were Hatched
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