I think many people take a backwards approach to finding an internet business idea. They try to figure out what they think is a sure deal as far as making cash flow. They hyper-rationalize it. It’s understandable, but very few good business ideas make any rational sense. No one thought Twitter made any sense, who needs it! Ring tones? Ridiculous! Why would anyone buy them? Take pictures with your phone. Yeah, right! Google makes billions offering free services. What sense does that make? Well, it does make sense in the topsy turvy world of the internet.
One of the main mistakes people make with their online business is that they super impose real world business ideas onto the technospheric realm. This data-heavy realm has its own evolving ideas and its own rules of the game. To many people, this became apparent only in hind site, with the dot-com boom and bust of 2000.
Here’s what happened. Investors figured if they double up on free market concepts with funding new online businesses, the profits would be tenfold online, but it did not work that way. Start-ups with little-to-no money beat out dot-coms that had millions. Many ideas that seemed to be sure-fire things, like making it easy for people to pay parking tickets online, completely bombed. See the movie, Startup Dot Com. Here is a list of the biggest internet flame-outs: http://www.cnet.com/1990-11136_1-6278387-1.html
Some ideas were too early. Some did not address a problem, and some were just too rational. Don’t get me wrong, I’m a big fan of logic and rationality, but it must be applied differently online.
After the Wall Street dot-com bust, erroneous conclusions were made about the bad results.The venture capitalists and Wall Street hotshots, along with the press and blogger pundits, concluded that business would not fly on the internet and that it was a passing fad that could not be monetized. Eventually, they claimed, Ebay and Amazon too would fail. And many did – Netscape, Lycos, Alta Vista, and even in recent months, Yahoo, has made the news for not being able to keep afloat without merging with AOL, which is also in trouble in regards to sustainability.
But look at the growth of the web since then. Especially, business. Business has continued to grow exponentially right through the dot com bust. Most of the huge successes have happened post-2000 dot-com bust. See Ray Kurzweil’s predictions on the growth of the internet. Google, Youtube, Facebook, Twitter, Paypal, LinkedIn, Bebo, and on and on and on – many thousands of thriving small businesses online including our four web businesses.
We started our online business in October, 2003, and were making a profit by May, 2004. Our business has been growing on an average of 40% per year with very little additional money put in. We started with a $1 (purchased from a friend), hopelessly out-of-date laptop that had broken keys. We spent roughly $25 per month for two services and eventually were beating out Entrepreneur Magazine for our niche – passing up a Fortune 500 company, in other words.
So what is the best internet business idea? The one that motivates you and has niche attraction. One of my favorite niches online (that I don’t do for a business) is the synthesizer hobbyist. Another one I have watched is how to grow bonzai trees, and another is origami.
If you told a random person ten years ago that you are going to make a living writing about Origami, they would say that is irrational — and it was. But no longer. The best internet business idea is the one that motivates you and has a hungry audience. Don’t think you can start a shoe merchant store online and ever get a foothold in that. Too big of a niche.
