In November I started a list of Location Based Social Networks (LBSN) – and in my first post I wrote “The question is how many of those will be alive next year…” Sadly to say, today (February) I started to update the list with those that are already closing or on their way to close.
My answer then was simple, only those with a solid revenue model and clear value proposition will last. Let’s take a first look on what makes a solid revenue model and services that have clear differentiators.
Profit is the only objective. What is the reason we create a new service or put a company together? The only answer is “TO MAKE MONEY”. Any other reason you may think or find is secondary. The source of that money is your customer. The way to get that money (legally) is by providing them goods, services, and solutions. The products and services are not the objective of the company, they exist only as the conduit to get your customers money by providing them something valuable they need and that keeps them happy.
The Business Model IS the differentiator. I may sound extreme here, but what differentiate services and makes them successful is not technology, but their business model. Take a look at the (now) 80 Location Based Social Networks on my list. I don’t believe there is much technological difference between them. Bottom line, only those that will succeed to generate revenues will survive.
Marketing, Business Dev and Sales (MBDS) are a key part of your Business Model. Review the list of LBSN and continue with the following exercise. Cut and paste the message excerpts from their websites WITHOUT the name of the company. Read the document the day after and try to identify who is who. If you are one of the owners of those companies, I dare you to pass the list through your employees and see if they can pick their own company from the list. Close your eyes and imagine taking a goldfish from the water tank and leaving it on the table. That’s your company without MBDS.
Business Models are NOT cross-market portable. Many of the LBSN base their hopes in implementing successful WEB2.0 business models, ignoring that the WEB and Mobile environments are completely different. Messaging in the WEB is free but mobile text messaging cost money. WEB mail has no charge but pushing your email to your blackberry carries its own costs. Even Voice is free over the web (skype, jaxtr, etc) but that’s far from being the reality in the mobile world. Ignoring this and other differences result on a distorted view of customer acquisition costs and wrong operational expenditures estimations that lead to “…We had an amazing and unique technology but we run out of money…”
There are other components in the framework, and each one of the elements here presented has its own subcategories, questions and connectors. Want more info? Quid pro Quo, leave some feedback of value for me and the other readers (or just pay for it). As you may see blogging has also its own business mode 🙂