Any non-excludable goods, which includes public goods (which are also non-rivalrous) are very difficult to profit from. These include lighthouses, laws, national defense, clean air and water, a sustainable population of fish and game, and so forth.
I say "very difficult" because search engines, for example, are non-rivalrous and non-excludable in practice. They are "public goods". The trick is, access to the attentions of and data generated by search engine users is excludable, and this is the good that Google actually sells. But any sort of non-excludable good from which your consumers cannot generate an excludable good you can sell for others would be unprofitable.
Programming languages (mentioned by another post) are another good example of a public good: they are non-rivalrous, and while they may be excludable as long as you sell the only compiler/interpreter/runtime and sue everyone else who writes a different compiler/interpreter/runtime, in practice no one will pay for a programming language anymore so you have to make it non-excludable for it to even exist in the outside world. Likewise, Google is probably excludable in the sense that they can set up a paywall before you use it, but in practice Google has chosen to make the search engine non-excludable and it's hard to see how a paywalled search engine would work (though I won't rule it out as a possibility).
Is Matlab an exception to your statement on programming languages? They are following your hypothetical of owning the only implementation, and people are certainly willing to pay for that proprietary language + implementation rather than use another. Arguably being a somewhat niche language makes its market and competition smaller, but it's a very large niche, spanning several industries and many academic institutions.
Alternatively, Matlab may succeed because it straddles a couple of different categories. It could be argued to be a language, an implementation of that language, a development environment... since it's very goal-oriented, it could even be seen as a more traditional piece of software with an unusually hard-core scripting language.
All good are partially non-excludable and partially excludable (e.g. you can exclusively sell the name of a lighthouse; restaurants which exclusively sell food give away for free, to the whole city, the option to buy food. This free option has concrete value, e.g. houses near many good restaurants, or one amazing one, are worth more.). It's just a matter of degree. And solved with a little creativity.
And you can do the google trick with programming languages: Microsoft's C#, which supports its platform. Another example is postscript - a highly specific language tied to a system.
You can also make money by implementing a language that someone else created: java vendors e.g. BEA Systems; C++ vendors e.g. Borland; and SQL vendors.
And there are oh so many ways to totally botch the execution. You can make the best thing in the world and still fail because you couldn't market it and no one ever knew that it existed.
Can you point to someone who developed a useful medicine for 3rd-world diseases and failed to make money?
Few diseases are confined to only extremely poor areas. Medicines against malaria, for example, are a robust business. If you developed a good vaccine, you could make a lot of money selling it in Brazil, China, India, and other developing countries. The reason there is no vaccine isn't because there's no money to be made, but people have actually tried pretty hard and been unable to develop vaccines that aren't as risky as the disease itself.
I would argue that if a medical device/drug was developed for the third-world as opposed to being a developed world hand-me-down, it would be profitable. Good book on the topic "Fortune at the bottom on the pyramid".
It costs $90 year to have the tool to get in iphone appstore.
The game console dev kits are very expensive (at least they have been when I looked)
Is MS Visual Dev thingy free?
There is free version of probably every language out there. But, that doesn't mean people aren't making money selling that language. Cobol compilers come to mind.
We really need to remember that "make something people want" is a specific piece of advice relative to building a product. We get all giddy about this advice because as programmers, that's what we love to do; build things. But a business depends on many many more things than just your product. I'd argue that a company's product is, at max, 30% of what matters to the profit-generating system as a whole.
So to answer your question: it is irrelevant. And I encourage you to separate "product" from "profit". Because if you want to make profits, you need to master business and marketing. Making products is for those programming guys. The great thing about HN, is that we think we can do both ... and we can! - Just remember that they are different hats for a reason.
What I've found is that there's almost always some people that want any particular thing. The two really big questions are 1) How many of them are there? 2) Can you make money off them?
#1 is much tougher. If you're in a niche inside a niche inside a niche and you end up with 10 paying customers sending you $20/mo it's technically "working", but too small to be worth it.
#2 is easier. The situation Twitter is in. They have tons of users and now it's purely a matter of ingenuity to come up with a way to profit in a big way.
I very strongly doubt that they will be unable to profit. They've just managed to rack up so much funding without doing so that they haven't made it a short time priority yet. If they had no master plan for huge profitability only idiot VCs would continue investing.
It depends on your definition of profit. You can make something people want and end up with a business that makes $10K profit, but you won't be quitting your job to run that business.
If that's $10K profit after paying your employees and yourself reasonable salaries, then you're off to a sustainable start, and should stick it out. You're probably still growing, and if your marginal costs are not too high, any further growth should be almost pure profit.
If it's $10K without paying yourself, then you've got some work to do, but if you can live lean off your savings, you may still be able to improve the situation to the point where the business is sustainable or better.
If it's $10K before you pay your employees, find a new business, this one's not going to happen.
Fully on demand cable television. So many people tell me "I'd love it if I could just pay per channel and forget about the other channels."
That got me thinking it may be something to exploit. Not so, with infrastructure costs swallowing up so much of the potential profits. People will just have to deal with all the channels they end up paying for. So, it's either the internet or bust if you don't want to play the cable game.
http://mbusreloaded.com/umbus -- several hundred people use it every day, all of them cheap/lazy college students who aren't going to pay for the privilege. The value of advertising on the system seems to be barely greater than costs (a few tens of dollars per month) and the current advertiser is behind on payments.
Jury is still out, but free/freemium music services look hard. (People don't seem to want subscription services.) lala sold allegedly because they weren't getting to profitability fast enough, imeem struggled, and Pandora needed an act of the United States Congress to deal with sharp increases in streaming royalties.
A huge thing to note, even with a large number of unprofitable cases, is not that the YC mantra is flawed, but more likely systems may not yet be in place to facilitate profitability. For example, if there were an awesome micropayment solution I'll bet a lot of currently unprofitable sites could find profitability.
Agreed - I think the minimum viable visa charge (due to high minimum fee) and the increased abandonment rate due to the hassle of using your CC is holding a lot of things back.
I think this is a very necessary startup, but one that's going to be very difficult to pull off well, and will require serious cash.
You're ignoring the fact that 'want' is just one of many considerations people make when spending money. Things like 'need' and 'affordability' are going to factor in too. Want is probably just the strongest.
"We've long since shed the notion of recouping costs through donations, and instead turned to ad revenue for covering operating expenditures. Our entry into the wild and not-so-wonderful world of advertising has been mixed. We've added more ad positions to the site over the years to offset rising overhead and been bounced around between so many ad networks and account managers that I'd be hard pressed to list them all. But we've succeeded—4chan is still here, after all."
Amazon is losing $2 on each e-book. Sometimes forward thinking innovations take a while to get profitable. Sometimes the market is too small. There may be 5 people who want it, but it costs more than they can afford.
[+] [-] philwelch|16 years ago|reply
I say "very difficult" because search engines, for example, are non-rivalrous and non-excludable in practice. They are "public goods". The trick is, access to the attentions of and data generated by search engine users is excludable, and this is the good that Google actually sells. But any sort of non-excludable good from which your consumers cannot generate an excludable good you can sell for others would be unprofitable.
Programming languages (mentioned by another post) are another good example of a public good: they are non-rivalrous, and while they may be excludable as long as you sell the only compiler/interpreter/runtime and sue everyone else who writes a different compiler/interpreter/runtime, in practice no one will pay for a programming language anymore so you have to make it non-excludable for it to even exist in the outside world. Likewise, Google is probably excludable in the sense that they can set up a paywall before you use it, but in practice Google has chosen to make the search engine non-excludable and it's hard to see how a paywalled search engine would work (though I won't rule it out as a possibility).
[+] [-] zackham|16 years ago|reply
[+] [-] lmkg|16 years ago|reply
Alternatively, Matlab may succeed because it straddles a couple of different categories. It could be argued to be a language, an implementation of that language, a development environment... since it's very goal-oriented, it could even be seen as a more traditional piece of software with an unusually hard-core scripting language.
[+] [-] xenophanes|16 years ago|reply
[+] [-] 10ren|16 years ago|reply
You can also make money by implementing a language that someone else created: java vendors e.g. BEA Systems; C++ vendors e.g. Borland; and SQL vendors.
[+] [-] mcav|16 years ago|reply
You probably won't profit if you make something people don't want.
But making something people want doesn't correlate nearly as well with whether or not your product is commercially viable.
[+] [-] MicahWedemeyer|16 years ago|reply
[+] [-] breck|16 years ago|reply
But if you don't create any value, it's easy to capture it.
[+] [-] unknown|16 years ago|reply
[deleted]
[+] [-] grinich|16 years ago|reply
[+] [-] tlb|16 years ago|reply
Few diseases are confined to only extremely poor areas. Medicines against malaria, for example, are a robust business. If you developed a good vaccine, you could make a lot of money selling it in Brazil, China, India, and other developing countries. The reason there is no vaccine isn't because there's no money to be made, but people have actually tried pretty hard and been unable to develop vaccines that aren't as risky as the disease itself.
[+] [-] baran|16 years ago|reply
[+] [-] tc|16 years ago|reply
There are some counter-examples (e.g. Franz, LispWorks), but I think it's best to just consider this sort of work a labor of love.
[+] [-] njharman|16 years ago|reply
The game console dev kits are very expensive (at least they have been when I looked)
Is MS Visual Dev thingy free?
There is free version of probably every language out there. But, that doesn't mean people aren't making money selling that language. Cobol compilers come to mind.
[+] [-] DenisM|16 years ago|reply
The trick is to pick the right customers.
[+] [-] ilovecheese|16 years ago|reply
UC, MIT, Bell Labs, Google, Microsoft, Sun, ... the list goes on and on.
[+] [-] chrischen|16 years ago|reply
[+] [-] cellis|16 years ago|reply
[+] [-] fizx|16 years ago|reply
[+] [-] apsurd|16 years ago|reply
So to answer your question: it is irrelevant. And I encourage you to separate "product" from "profit". Because if you want to make profits, you need to master business and marketing. Making products is for those programming guys. The great thing about HN, is that we think we can do both ... and we can! - Just remember that they are different hats for a reason.
=)
[+] [-] staunch|16 years ago|reply
#1 is much tougher. If you're in a niche inside a niche inside a niche and you end up with 10 paying customers sending you $20/mo it's technically "working", but too small to be worth it.
#2 is easier. The situation Twitter is in. They have tons of users and now it's purely a matter of ingenuity to come up with a way to profit in a big way.
[+] [-] nico|16 years ago|reply
[+] [-] drp|16 years ago|reply
[+] [-] vaksel|16 years ago|reply
[+] [-] ewjordan|16 years ago|reply
If it's $10K without paying yourself, then you've got some work to do, but if you can live lean off your savings, you may still be able to improve the situation to the point where the business is sustainable or better.
If it's $10K before you pay your employees, find a new business, this one's not going to happen.
[+] [-] slashedzero|16 years ago|reply
That got me thinking it may be something to exploit. Not so, with infrastructure costs swallowing up so much of the potential profits. People will just have to deal with all the channels they end up paying for. So, it's either the internet or bust if you don't want to play the cable game.
[+] [-] swolchok|16 years ago|reply
[+] [-] ephermata|16 years ago|reply
[+] [-] jeromec|16 years ago|reply
[+] [-] ericd|16 years ago|reply
I think this is a very necessary startup, but one that's going to be very difficult to pull off well, and will require serious cash.
[+] [-] pmorici|16 years ago|reply
[+] [-] noonespecial|16 years ago|reply
Making something people want enough to pay what it costs to create it : hard.
[+] [-] zitterbewegung|16 years ago|reply
[+] [-] drp|16 years ago|reply
"We've long since shed the notion of recouping costs through donations, and instead turned to ad revenue for covering operating expenditures. Our entry into the wild and not-so-wonderful world of advertising has been mixed. We've added more ad positions to the site over the years to offset rising overhead and been bounced around between so many ad networks and account managers that I'd be hard pressed to list them all. But we've succeeded—4chan is still here, after all."
[+] [-] antidaily|16 years ago|reply
[+] [-] fnid|16 years ago|reply
[+] [-] eagleal|16 years ago|reply
[+] [-] wmf|16 years ago|reply
[+] [-] byrneseyeview|16 years ago|reply
[+] [-] iterationx|16 years ago|reply
[+] [-] ryanwaggoner|16 years ago|reply
[+] [-] quizbiz|16 years ago|reply