Big Profits

In a talk at the Spartina Summit III, Howard Love, chairman of Love to Know, and co-founder of Spartina Ventures, addresed the issue of profits. It’s so easy to get launched into your business, and take your eye off the goal. Here are some of his points:

Profits- Why is it important?

• It’s a validation that you are providing a service that is valued.
• It’s the primary reason people invest time and money.
• It allows you to control your destiny
• It determines your exit valuation

Profits – How to get them

Profits in most of our businesses come from user adoption. It means that people are actually using our service. Here is the Spartina ‘Path to Profits’:

• Release the product to get user feedback.
• Get traffic.
• Monitize it – people will pay if it’s useful.
• Get to breakeven
• Scale it at the breakeven level as fast as you can
• Get really profitable.

Breakeven

Breakeven is the critical point. First you have validate a business model, ie, that users will buy a subscription for the service you offer. Then you have to sell more users by growing traffic, and optimizing conversion from visitors. Ways to do that include changing message to see how you can increase conversion, or placements of ads so that they get higher click-throughs.