The new business reality: a feature as a business model


It’s almost comical to say there is a new business reality at play. This is because there are so many forces at work lately, that it seems as though new realities are created and killed almost every quarter. Opportunistic turbulence is probably the best term for it. I’d like to call one out for review

Features can be business models. I’ve listed some examples below:

Dropbox – This business now has 50+ million users and is steadily growing. The service provides a personal storage space in the cloud accessible from your desktop. That’s it. Google along with others have competitive services but none have the stickiness that Dropbox does. At one point, Steve Jobs offered to buy Dropbox because he believed it would be a great feature for the Mac/iOS devices but shared his opinion (in true Stevie fashion) that Dropbox was not a business. “He said we were a feature, not a product.”, Dropbox Founder, Drew Houston said.

Instagram – This little business was recently acquired for a huge (bubblicious) amount and it’s simply a way of sharing photos between friends on your mobile device. You can comment, Like/Unlike and follow people. That’s it. The founders did not launch a mirror site and chose to focus on the mobile application. A supporting ecosystem of websites such as Statigram, printing services like CanvasPop and even the Socialmatic Camera emerged from the passion that Instagram generated. It’s very prosumerish like Twitter was in the early days.

Pinterest – This is like Instagram but it’s even easier. Users typically don’t take the pictures and simply share images of things that they like. That’s it.

This is where an MBA would mention the fact that businesses are supposed to make money.

  • Dropbox makes money by charging more for access to increased storage space.
  • Instagram doesn’t make money but this is what the founder had to say about the future. (It’s also important to note that Facebook bought them to help monetize mobile, which is an essential part of the strategy in their IPO docs.)
  • Pinterest currently makes money. They use a service called Skimlinks to find images on Pinterest that link to sites that are apart of ad networks. Once they find them, they amend the links to include tracking code so that Pinterest can be paid for driving traffic. Smart.

There are a couple of reasons why these “features as business models are happening.

  1. People are more pressed for time and tend to try to find a simple way to get something done. They associate businesses with doing one thing well. It has been a real challenge for a company to say they do, any more than two things really well and it just got worse because of people’s thin-slicing of personal time and brand concrete.
  2. Apps are akin to tools. App = screwdriver. (Think of your smartphone as a Swiss Army knife.) Many businesses are created from apps these days and for anyone that has tried to shoehorn a ton of functionality into an app will tell you; it’s tough and unwise!

My Advice to anyone starting an app based business is to find behavior that people are used to doing in everyday life that an app could do as well. As you do this, you will want to design with the term dead simple in mind. If you hear that and better yet, feel it, you’re probably on the right track. Great tools are simultaneously simple to use and needed.

As applications become more and more apart of our daily lives, I would expect new business models to stay simple and yet deep, with respect to fully exploring that consumer behavior. Less Wal-Mart and more Forkly. We will, if course also see more acquisitions. Viva le Evolution!

By Michael Myers