The Closing of the Digital West, and What it Means for Startups
Why profitability can’t be an afterthought anymore.
Once upon a time, the internet looked like the Wild West did to colonial Europe. It was a vast frontier, completely unexplored (except by, you know, the thousands of societies that had been living there for literally millennia) and ostensibly limitless in its possibility: a whole new world where gold could spring from anywhere.
From this fertile cyberwest came some of the largest companies of the modern world, many of them still prominent today. And while these companies rake in billions in revenue now, for many of them, profitability was merely a distant landmark on the roadmap when they first got started. The formula was simple: first, create something that everyone uses. Then make money off of that, somehow, later.
For the era, this formula made sense. For the first time in history the internet allowed a company to serve millions upon millions of people easily, scaling audience or user base without scaling the cost of that user base linearly. This meant the strategy of “attract first, monetize later” worked pretty well for a lot of companies.
But as the saying goes, all good things must come to an end.
1890 All Over Again
The short truth is that today’s internet isn’t yesterday’s internet. There are simply more companies out there, and most of the low-hanging fruit has been picked. We haven’t really seen a new major social network since Snapchat launched in 2011, and even then, Facebook has been the unequivocal dominant player for nearly a decade.
The vast ocean of endless possibility that was the early internet has morphed into a more mature, developed market of companies, websites, and platforms. The territory has been charted, and the rules of the game are being defined in ever-increasing detail.
In many ways, the “frontier” of the internet may just be closed.
Moving Through a More Crowded World
Of course, this doesn’t mean that there’s somehow no opportunity left on the internet — far from it. I’m sure there are titans just beneath the surface, waiting to break free and become the subjects of tomorrow’s digital headlines.
But it does mean that startups and new ventures can’t just take the old “build it big and sell it later” approach. Monetization as an afterthought is a relic of a different era.
Instead, profitability needs to be in the equation from day one. You can’t just rely on magical advertising dollars, VC money, or “idk man we’ll figure it out” to save you anymore: you need a plan, and that plan needs to demonstrate how the business will make a profit.
Modern online startups need a clearer head and a stronger recognition that, plainly, they’re moving in a more crowded world. They need a more long-term lens in building their business, and one that focuses on profitability at the outset.
Because the truth is, it doesn’t matter how big you build it: if you can’t make it profitable, it all comes tumbling down.
