• Antonio de la Esperanza

Start Up #6 - Growing your company, is monetization a priority?


Welcome everyone!

At the end of the day, cash is what will keep a start-up moving forward, but is it the most important thing to create value?

I have been fortunate enough to talk about start-ups with a fair amount of people so far in my career. Most of the people agree on most of the steps to grow a company: escalate, hire wisely, look for the right partners, etc., but the thing that I can't get people to agree on is "monetization".

I have had long discussions about this with my cousin, the CEO and founder of Wave Application, probably the best peer-to-peer private location app in the market, and I recently read an interview (in Spanish) to Carlos Guerrero, my partner in both Sitka Capital and Akola Ventures and the one of the most respected start-up lawyers in Spain in which he talks about this.

So, should I try to monetize fast or not? Well, according to me, it depends.

Carlos Guerrero, for instance, defends that looking for clients and monetization should be an obsession. First, because you can avoid seeking for financing for some time (which will allow you to focus on your product better) and secondly, because getting clients will give you feedback and data to work with and improve. I think this should be the case for most companies, specially if you are a "seller" of some sort.

On the other hand, although not entirely different, my cousin has been focusing in user growth without caring at all about monetization. This is a strategy that has been followed by the main social media companies in the world and that has proven to be a winner in some cases. Facebook, Instagram, SnapChat, WhatsApp were totally free at the beginning, which indeed helped them grow to what they are now.

A free product is more likely to grow exponentially and this user growth will give you the notoriousness, the relevance and the weight you need to operate the start-up based solely on third party funding until you decide it is the right moment to start monetizing. This can be a great strategy for a "provider" of services of some sort.

This is not a black or white answer, but it is a decisions that you should make early in the operation so you have your goals clearly marked.

I would love to hear your opinion: do you monetize?

T

#startup #AntoniodelaEsperanza #consulting #monetization #waveapplication #facebook #whatsapp #SitkaCapital #AkolaVenture

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