On July 17, 2009, the WSJ published "The Internet is Dead (As an investment)" by James Altucher. His opinion is that the internet has become a commodity industry because the companies are utilities like the gas company. I agree that many in the business are making it a commodity market by promoting theories like Chris Anderson's "Free" and other mass marketing tactics that don't capitalize on the strengths of the internet to add value and market more powerfully. But when he claims it is hard to anticipate another Google or Amazon, I think he is short-sighted. The reasons for Google and Amazon success are clear and I don't know why more investors aren't focused on investing in start-ups with these characteristics instead of investing in internet businesses relying on old fashioned mass marketing tactics. Fred Wilson the venture investor filed a response on his blog, "The Internet is Alive and Well (As an Investment) and has a lot more comments than Altucher generated. I participate by replying to some of the comments I liked there. Here's my comment on the WSJ Altucher article:
I am an entreprenuer.
I think Amazon succeeded because it aimed to generate a profit at the smallest scale and because of a marketing strategy that capitalizes on the strengths of the internet (Affiliate marketing).
I think Google succeeded because it offered a better solution and won the trust of consumers. Then they made money by selling better ads (performance based, rather than exposure based) that capitalize on the strengths of the internet.
I am interested in investors who are interested in better products and marketing strategies that capitalize on the strengths of the internet.
I am not interested in investors who think success/failure is predicted by gross numbers of visitors, without caring if they visit once, pay nothing and never return again. I am not interested in investors who think mass marketing tactics (CPM based) work on the internet.
