Re: so is the cluetrain on track or did the dotcoms
derail us all?
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Brad Hutchings
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Apr 29, 2001 12:16 PDT
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Doc wrote:
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companies that seem to have gotten the fewest clues are those most
vested in the model of Business as Shipping. Publishing and Recording
are two big ones there.
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So what do you make of the ArsDigita fiasco? As chronicled after-the-fact by
Philip Greenspun:
http://philip.greenspun.com/arsdigita/litigation-story
The interesting thing about Philip's piece is that it was the first thing
I've read that made anyt sense of "open source" as a business model. Most
likely, that's a result of someone making the case who'd actually made it
work without crazy VC or a premature IPO propping him up.
I think a lot of otherwise smart people have difficulty embracing "service"
over "shipping" as a business model because we/they tend to interact most
and are most inspired by great products rather than great service. Also,
Philip's best reason for aceepting outside investment -- having some capital
as a cushion -- points to the inherint risk in service-oriented business
models: surviving the down cycles. With product oriented business models,
you expect and embrace down cycles. They are called development cycles. And
when the product ships, if you've done things right, you make a lot of money
which can be stored away for the next development/down cycle. And as your
company matures, you expect to stagger your product cycles and diversify
your product line.
So my questions are... how do we present service models so that they make
business sense, especially when they depend on underlying product
development cycles? how do we tell customers we're not selling them a
database or a ready-to-deploy CRM system (think Oracle here), but that we're
selling an ongoing commitment to keep them on the cutting edge? The
difference in the customer's mind is fixed, one-time, sunk expense (although
there are always upgrades and maintenance) vs ongoing expense.
-Brad
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