Kevin Fong of Mayfield used to say
We divide business plans into three categories: candy, vitamins, and painkillers. We throw away the candy. We look at vitamins. We really like painkillers. We especially like addictive painkillers!
I’ve been thinking of this lately as I’ve been reviewing some business plans of companies looking for investment. They’re quick to explain what they are building, and why it’s so cool, and (for the better ones) why the competition can’t catch up. But they’re often weak on what problem it is they are solving, and why people would pay money for their solution.
It’s easy with medical companies. Sick people want to get better, and they’ll pay for products and services to make them well. (Or complain to their insurance company to pay for it, which is a whole other kettle of fish, but not the point here.)
Same for many technology product companies. Nobody ever went broke making a cellphone that was too thin, or with too big a screen, or with too much battery life. Solve those problems (like Jacket Micro Devices is working on) and you can make money.
Honestly, I think most of Web 2.0 is vitamins at best, candy at worst. (Which is perhaps why most of the Web 2.0 services are free. Here’s a tip: If no one wants to pay for what you’re providing, maybe that’s a hint that it isn’t worth much.)
I’ve seen a couple of Web 2.0 companies that might actually be painkillers. BigContacts is one. If I could have the hours back that I’ve spent cleaning up various contact databases… Try syncing from your Palm to your Mac to your Exchange server to Plaxo to a second Mac without getting a duplicate! I’ve experienced pain in this area, and I’m not the only one. Solve that problem, and you can make money as a painkiller. Structure it so the customer keeps coming back for more, and you have an addictive painkiller.
PBwiki is another (Disclaimer: I am an investor). It turns out that people really experience pain collaborating on documents. Once they understand that you don’t have to mail Microsoft Word files back and forth, tracking revisions in multiple colors, they begin to organize their documents with online tools like wikis. We’ve found that PBwiki is so compelling that thousands of K-12 teachers (who don’t have a school budget for it) are dipping into their own pockets to pay for the premium versions. Every month. Addictive painkiller.
But most Web 2.0 companies sound like candy. “My new Website is iTunes but with the social networking of MySpace! With Flash videos for every link!”
Candy. And licorice candy at that… you might like a bite or two, but you can’t keep eating it. (At least I can’t.)