Facebook · Monetization

What are best ways for a startup similar to HouseParty to monetize?


June 1st, 2017

My colleagues are developing a new platform for video chats similar to HouseParty and are weighing different methods to monetize off of their platform. At first they want to gain traction and reduce churn, and then are thinking of making money via ads, data, subscription fee, and possible eCommerce. What would you recommend for them to do?

Adam Hill Startup guy, occasional founder and mentor.

June 1st, 2017

There are only so many ways to monetize this type of business and you've listed all of them. Some of these methods have competing strategies depending on the goals of the founders.

Do they have capacity to build the system without turning a profit for an extended period of time? If they do then focus on building a strong user base. One challenge with this strategy is conversions. If you build a large user base giving the service away for free it can be a challenge converting those users to paid subscribers. Finding the right balance of free and paid services is tricky.

Ad and data revenue can be lucrative but you typically need a massive user-base to make any money here. Just look at the lack of moderately successful social networks. It's an all or nothing game here and some massive companies still struggle to turn a profit on these alone.

I'd recommend digging into the markets. Look at companies with similar business models in your space (and similar industries). What have they done well? What has tanked other companies? Then figure out the runway and determine how you plan on getting to a success point (break even, exit, whatever).

Tesfa Asfaha Business Man

June 3rd, 2017

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