Here is a post (the first of two) from Steve Carpenter on the different potential business models for internet startups right now and some of the metrics necessasry to get to $10mm in revenues.
I believe that services are one of the best internet business models for the next 10 years for the following reasons:
- Price shopping. It is tough to compare a service provider to another using an apples to apples comparison. There are no SKU numbers because it's not a standardized product. Thus, it gives good companies the ability to establish brand and customer care around the service in order to raise value.
- It's just the beginning. Web services is still in its infancy. While there are well-established players for social networking, gaming, and product commerce, services is still the wild west. This leaves room for smart companies to position themselves and get a foothold without having to knock off the 800 lb. gorilla.
- Accepted. Services are an integrated part of the economy. You're not trying to teach an old dog new tricks. You're just making it more efficient for people to buy.
- Demographic shifting. More and more people in their 20's are reaching the age of starting their careers, having kids, and arguably increasing their spending power. As this happens, there will be a natural shift towards the web. People will seek out service providers over the web because that's what they're used to.
- Better technology. It's now worlds easier to discover and choose service providers on the web. Word of mouth is effectively shifting to the web through rating systems, transparent customer feedback, microblogging, and other tech advances. Over time, this will leave a digital identity of most businesses out there, and customers will use the feedback to make quicker, better-informed decisions.