Venture Capitalist Is Looking For An Abundance Of Unique Visitors
Certain Venture Capitalists have a very limited idea of what constitutes a profitable idea. Their concerns – which often relate to placing a prerequisite of a stipulated number of unique visitors – puts the start-up in an awkward position of having to focus on garnering a large audience without considering whether or not this will ultimately be profitable for them and, thereby, for the Venture Capitalist.
Focusing on Uniques Is Flawed Logic
Having a large viewership is certainly beneficial in terms of a word-of-mouth strategy. If you are unable to turn 50,000 unique visitors on your product into something you can monetize, however, all you will have is a highly-attended funeral procession. Without a proper plan for turning your viewers into something that can turn into capital – whether this be directly paying customers or a platform to pitch to advertisers – your product will quickly falter.
Monetize Instead Of Popularize
An entrepreneur with hopes to open a supermarket visits his local bank to acquire a loan to open his potential business. The bank informs him that in order to get their funding, he has to guarantee 50,000 shoppers per year. The future supermarket owner therefore spends his efforts on marketing and ensuring that on opening day, 50,000 shoppers are lined up awaiting the market’s doors to open. Unfortunately, with all the time the owner spent garnering this mass of people, he forgot to stock his shelves with products, thereby rendering his supermarket useless. As a start-up, entrepreneurs must consider what is beneficial for their company rather than simply appeasing their Venture Capitalist.
The Lesson We’ve Learned
Unique visitors do not directly translate to profit, although some Venture Capitalists seem to think so. A start-up should consider whether or not their idea can produce profits before they attempt to maintain a growing audience. Without a plan for monetizing your idea, the audience will only function as passive viewers rather than venues for profit.
About Groundhog Day
Each week, we look at some common and repeated mistakes start-ups make time and time again. In an effort to avoid a Groundhog Day, we’ll analyze these mistakes and attempt to deter future start-ups from them while offering advice.