Subject: shooting holes in the sky
From: Tom Lord <lord@regexps.com>
Date: Tue, 9 Oct 2001 03:49:16 -0700 (PDT)



I get the cold sholder from various FSB execs and VCs when I propose
business (or business unit) plans selected from the design space
described below.  Would someone, perhaps, like to hire me and we can
explore this particular space together?





	      Towards a broad class of FS Business Plans

I find it easy to pay $10/month for a web site membership if the
quality of content on the site is high and of interest -- even if the
value received for payment is slight compared to what I can get by
accessing the site for free.  I suspect that this is true of many
people who can afford a computer and an internet connection.  Previous
employers have spent more than that on me per month just to provide
some pretty crappy snacks.

There are many ways to implement a mostly free site with slight added
perks for paid membership -- I won't list them here (consider my list
a "trade secret".)

At $10/month, you get over $1M/year in revenue for every 8500
customers.

At that scale, the costs of hosting the site approach nominal.  So
lets focus on other costs -- and on profit.

Thinking big, let's aim for a 100% ROI (before taxes).

That gives us roughly $500K per 8500 users to maintain our site,
generate content, and do enough S&M to get customers signing up.
(Please don't read too much Folsom St. into that.)

There are lots of ways to divide that $500K up, depending, for
example, on how many multiples of our 8500 customers we think we can
achieve.  

As an example, let's aim for a measly 4*8500 or 34,000 paying
customers.  That gives us a $2M/year budget.

$2M is enough for around 6 senior level professionals, with cash
equivalent to two more left over to just toss around (and pay hosting
expenses).  Of those 6, let's say that four do engineering.  Can 4
open source engineers serve 34,000 customers?  There's plenty of
evidence that they can.

I think there are a bunch of strategically key markets in which 34K
customers at $10/month is a realistic estimate of both demand, and of
what can be achieved by some well aimed sales approaches.  I won't
list those here either, though some of the people on this list have
received a small and defensively selected sample or two (and I'm still
waiting to hear back from you!).

One idea is to start spending around $1M a year on a variety of
different projects in this design space -- maybe 10 or 20 -- sharing
some resources between the projects.  Plan to start opening up shop in
about a year.

I think that'd be a pretty good way to spend money.

Wouldn't you?

-t