If youíre building a business or trying to make your existing company grow, monetization needs to be the first thing on your mind.
As an angel investor, I hear thousands of business propositions that stress innovation and lack the necessary monetization. These business developers walk through my door with great passion and excitement about their idea, but often miss the most crucial part of building a company. I remind them that even the greatest idea in the world cannot be built without a suitable business model of how to make money. Having sold numerous companies, I firmly believe that focusing on how to make $1 into $2, is not only the key for allowing a company to get off the ground, but to subsequently survive.
Being successful in the same age as Facebook, everyone wants to know how my story is similar to The Social Network. I tell them what they donít want to hear; I made my success by focusing on the key fundamentals that The Social Network frowns upon.
Facebook is an anomaly to the business world- itís based on the principle that if you create an idea and hold onto it, you will eventually be able to monetize it. The key to building a successful business isnít based on a far out idea - itís learning how to pair innovation with a profitable business model and understanding how to monetize your platform.
Someone once told me, ďYouíre going to fail 10 times before you get it right.Ē After starting dozens of businesses and seeing which ones I was able to capitalize on, you donít need to fail 10 times to make it right; you just need to understand the importance of making a buck before innovation to make it work the first time around.
Growing up in Wayland, Massachusetts with both of my parents as physicians, I never heard business being discussed at the dinner table. When I got to Babson College my freshman year, a new world was before me - I had to quickly adopt Babsonís core fundamental values of innovation and entrepreneurship if I wanted to succeed in the business world. I feverishly sat in my room after class every day designing businesses that I thought were out-of-the-box. I was stressing the idea of innovation and coming up with something no one had done before. After failing numerous times, I switched my focus to the back end of the business equation - making money.
I started to develop a mobile ad company out of my Babson dorm room, not based solely on doing something no one had done before, but creating a business that would fuse innovation with monetization. The foundation of all business models is how youíre going to buy for $1 and sell it at $2, no matter what idea or product youíre trying to sell. By zeroing in on the mechanics of my revenue model, I was able to monetize our platform and sell the company for $60 million at age 26.
While innovation and creativity are what fuel passion when starting a business, creating an effective revenue model is what will help any business grow and succeed. Before getting swept away with how to be different, think about monetization. If you initially focus on asking yourself "How can I make $1 into $2?" you will be exponentially more successful.
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