My strategy for making money on the web has been to pursue long-term equity in several money-niches. What exactly is long term equity? It’s the value that a thing acquires over periods of time and it is typically associated with the amount of profit that the thing is able to produce.
While many people make plenty of money flipping blogs, or pursuing short-term high-value income in short-life niches (the hottest tv show), my preference is to avoid the roller-coaster ride and massive startup effort, and instead own web properties that will make more and more money each year.
Having been successful in building some strong income-producing equity fairly quickly, I do have a few lessons I’ve learned that I’d like to share with the Performancing community.
The human brain often takes the current moment or “state of affairs” and projects it onto the future. The naive assumption, that everyone is naturally prone to make because of human biology and the brain, is that what works today will work tomorrow.
By and large, most things stay the same. Human beings love to communicate with each other. That will probably never change. However, what has changed is the medium of communication. So a company that bets on “communication” as their business offering will be much more successful then the company that bets on the analog phone.
Well, I should qualify that last statement. Let’s take a look at Verizon Communications. The two companies that merged to become Verizon became billion dollar companies because of dominating the local and long distance phone service in huge markets.
From what I understand, both companies had the foresight and the capital to adapt to new communication technologies (not easily or painlessly though). Even today, Verizon is slowly unleashing a wide-scale Fiber Optic network that’s been on the back-burner for over 20 years. The point isn’t the delay, but that a massively successful, multi-billion dollar company has been forced to confront change and not sit on their ass while the world passed them by.
The fact of the matter is that Verizon, and it’s ancestors, were forced to put a whole lot of money and a whole lot of work into adapting to change: a changing communications market.
The long-term equity investor normally desires to identify and stick with “what works” over the long haul. But a long-term thinker like myself can be blinded by the naive operating assumption that what works today will work tomorrow.
The world is not a static place. It is constantly changing. Especially on the Internet. Long-term equity investors like myself need to take change seriously. So how do you take change seriously? By thinking about it and preparing for it.
- Predictive Intelligence: Manage change by focusing on forms of content and content delivery that are not likely to be short term fads
- Contingency Planning: Be intentional about the future and the fact that change will happen. Develop strategies for adapting to both minor and major changes both in product demand and delivery infrastructure
- Experimentation: Dabble in, but don’t get overwhelmed by, new ideas and approaches. Dedicate a subset of your resources towards “experimenting with the future”
- Diversification: As you experiment, pick out the things that work and consider expanding upon them. In doing so, make sure to diversify in product offering, revenue sources and delivery method
I still believe that a long-term approach towards acquiring Internet equity is the best, most consistent way to gain wealth on the net. But I also admit that I was a bit naive when I first started and assumed that as soon as I identified something that worked, I could simply dig and allow it to keep working. That was a mistake.