I have a Chrome extension (TeamSync Bookmarks) that enables users to collaborate by sharing and managing bookmarks (anything with a URL). I'd like to get the community's thoughts on business models for a tool like this. I'm starting to make decisions on features (based on user feedback) that will begin to define the product more narrowly, and I want to have a better idea of a business model before investing more time. The goal is to exit through a successful sale ($100k or greater) of the business.
Speaking with other folks offline, here are a few options (that could be used in combination), and these aren't exhaustive. I know you all are awesome people, so I'd love to hear your thoughts. Thanks!
#1 & 2 are really the same. The reason someone acquires a company with a high number of non-paying users is to advertise to them. That's where Snapchat's value came from. 1M won't be enough users for an acquisition. It has to be a really high number of users or a really special demographic that has high value.
Figure out WHY someone would buy your business for $100k or greater rather than just program the feature into their product. Think about integration with other products and what users will be using when they NEED to share bookmarks.
Who would pay for bookmarks tool that only works as an extension in one browser? Find out who these people are, and talk to 100 of them. If they say they would pay for it, charge them. If they say they won't pay for it, your product doesn't solve a painful enough problem, so I would drop this idea and find a problem that hurts people enough they would pay some money to get rid of it.
Don't do ads. You need millions of users and hundreds of millions of views to make any real money and you will fold your company years before you even reach half way point, if you rely on this revenue source.
Monthly / one time fee: it depends on your customer LTV. If you don't know your customer LTV, start with low single payment. If you can't get people to dish out a few bucks once, you won't get them to dish out a few bucks every month.
I don't see anyone buying a Chrome extension.
Companies acquire other companies for following reasons:
If you have an idea who might buy your company, try to see which of the above strategies would make sense for them, and optimize your business for it.
Cultivate relationships. Selling companies is not like selling your old iphone on Craigslist.
Hope this helps!
In startup world everyone husles to get users all the time, and 1 million - is nothing. Getting more and more customers is each business's struggle all the time.
And talking about charging - you will have to find what your customers are willing to pay and for what through experimentation. Just run experiment after experiment and analyse after each one, and finally when you find something that works - ride it as long as you can.
i like this post, (i a not affiliated with them) which says to get traction first, then monetise. I agree. If you monetise something without traction, you are kidding yourself and potentially wasting time. With some trial and error, you can monetise anything on a small scale. Traction is the magic ingredient. http://fundersandfounders.com/how-to-raise-money-for-your-startup/
Vlad, Jennifer, Marius, and Paul, thank you for the comments!