So you will read a lot of romanticism when it comes to what’s important in business and learning how to be an entrepreneur. One of my favourite reads details how the key thing is to add value (with the ethos being “value will bring money”). Others focus on customer care, innovation, Quality, Unique Selling Points.
Now, there’s some solid truth to that. Afterall, integrity is important. And with desirability and value comes sales.
But a case study can be found in the recent demise of one of my previously absolutely essential apps Newton. After failing to successfully champion a revenue model, Newton is closing its doors this month. This is despite being a widely loved, amazingly executed productivity app. It saves me hours, week in week out, keeps my business’ mails and calendars seamlessly synchronised across multiple devices.
This view was shared by thousands of users who even took the time to give feedback on various app stores. True Social Proof. Despite this, the guys behind Newton, previously known as cloud magic, realised that they couldn’t keep delivering the service for free. After gaining a large fan base they switched to charging $80/year to the outrage of many who had it too good for too long. Many stayed, many left.
Some months later; and they are closing their doors. It’s a monumental shame to me on a personal level but a huge learning point. These guys went into a notoriously competitive field with a noble vision. But they neglected to focus on the bottom line.
In Business, it’s great to give a damn. It’s great to want to improve the world. BUT it’s
to make a profit. Simple as that. Apple don’t simply want to add value. They want to add value so people will pay a premium.
The learning point is, from the start, no matter what your aspirations, for the love of god, have a revenue model in place. Conceive it, interrogate it, critique it and tear it to shreds. It can evolve, devolve, be thrown in the bin and completely re-drafted, but have one. Arguably a business plan is simply the most critical weapon in your armoury. It keeps you in check, it keeps you on task and it ensures that whatever you do, you stay on point.
Whilst I doubt it has been an unprofitable affair, you have to wonder where the balance stood between revenue and the vision and how that vision changed along the journey.