95% of all business advice is worthless the minute you hear it. True, there are timeless business lessons out-there, but most of the stuff that you can read today you can safely ignore.
Why? All advice is given from the perspective and unique conditions at that point in time of the person that is dispensing it.
Take for example today’s post by David @ 37 Signals on how the web lost faith in charging money for stuff. The 37 Signals belief is that you must charge for apps, and if you don’t, then that’s just plain not right way to build business. But, this advice is specific to 37 Signals and their unique conditions. It is specific to their current belief system that says that you must charge for stuff to have successful business.
But…
What if founders of YouTube decided to charge for YouTube service instead of making it free? Would it gain such popularity to end up being sold for $1.65 billion to Google? I doubt it.
What about Hotmail which Microsoft acquired for $400 million? If it weren’t free would it be so popular and have $400 million valuation? I doubt it.
Would 37 Signals have same level of success without open-source, free Rails which they used as fantastic marketing vehicle? I doubt it.
There is place for everything. There is place for free, there is place for paid and there is place for open source. What you use depends on your conditions, your business and what’s going on at that point in time in marketplace.
That’s why say that that 95% of all business advice is worthless. It is good food for thought, but not worth much more. It is too specific to the unique conditions of the person dispensing it… Come up with your own stuff and do it your own way and then you’ll succeed.
Its not that 95% of all advice is worthless, it is that you keep reading from bad business mentors. The 37 Signals case sounds like an entrepreneur who learned everything from a short period of experience rather than the historic business lessons taught in business schools. You keep it free when you want to increase market share and kill any competitors, loosing money along the way, and you start focusing on cash flow when growth slows and the industry enters maturity. Today, you strategically focus on cost advantage, on value for money, but this has not always been the case. People used to buy by retailer recommendations, then by manufacturer quality, then by branding, and in the Internet age they became most sophisticated and look for maximum value for money, ignoring branding. The build it, grow it and sell it business model with YouTube and Twitter is ok, but that doesn’t mean that these companies have ever made any money through their companies. YouTube and Twitter are both still burning investor money. Google CEO Eric Schmidt has commented that these companies are still too expensive… he understands that he would be ripped off if he bought Twitter for $500 million. The hope behind the acquisition is that they might somehow figure out how to monetize all those eyeballs. And yes, they might start charging for YouTube videos if they can’t come up with nothing smarter, but Google has always been the innovative player. Facebook is using evil ways to make money and still has not broke even and Twitter has been designed all the way from the beginning to be acquired by Google but things don’t look so good now, especially after the announcement of their low retention rate.
I’m already feeling bad for being narrow-sighted myself… So to add on the previous comment, although the Internet as a services or product distribution medium targets sophisticated and informed customers, there are still many other industries where consultative methods of selling are still the best selling methods, and there are other industries where customers may choose to even leverage the total assets and capacity of a whole enterprise…