Abstracting the blogosphere

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Why Some Startups Stumble And Others Succeed @ businesslogs.com

Posted by suntzu on September 26, 2006

The author tries to use the famous Utility Theory of Economics to judge why some Web2.0 startups succeed and others fail. It says for each X unit of time/creativity/effort spent in creating content on a particular site, an individual should get nX units of pleasure/entertainment/satisfaction in return. This multiplier ‘n’, if quantifiable, will define the success of a web 2.0 site. The author takes Myspace, Digg, YouTube as case studies for successful web 2.0 companies and presents his take on value of ‘n’ that these popular sites provide. All these companies have high return multipliers. In Nutshell, the success mantra for web 2.0 companies is to ask for little from the user and promise a lot of entertainment or utility in return. This ensures a high comeback rate and regular upload of content.

Good practical application of the old economics theory to web 2.0 companies. A good-to-read post.


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