The odds of starting the next million dollar website are slim. Everyone wants to do it, but only a few ever will. Yet if you really want to start the next million dollar website, what kind should you build?
Here are seven types of websites that have been proven as ways to make millions, if not billions, online.
1. Start a search engine
Examples: Google, Bing, Ask, Yahoo
This is probably the most difficult business to start of any on this list. Creating a search engine takes a lot of technical expertise. It’s not like buying something and then selling it for a higher price. It takes hacker programmers to pull it off.
With that said, some of the most successful internet companies have started as search engines. This list includes Google, Bing, Ask, and Yahoo. Google leads the pack by a lot, but search engines have made a number of people rich off of the Internet.
Advice: If you want to make your fortune in search-engine-land, your best bet is to come up with an alternative to the traditional search method. People talk about starting a Google killer, but that probably won’t happen anytime soon. It’s more likely that someone will come up with an alternative to Google than a replacement. (I’ve got my ideas for this but won’t be recording them here.)
2. Create a social network
Examples: Facebook, MySpace, LinkedIn
Another way to make millions and billions online is to start a successful social networking site. Facebook is the big name in this field, but MySpace, LinkedIn, and others have done well for themselves.
Social networks succeed by connecting people that want to keep in touch. Facebook and LinkedIn seem to be more successful than MySpace because they connect people that are actually connected in the real world (or want to be connected). MySpace seems not to have as much traction because it connects more people who don’t have real-world relationships than people who do.
Advice: My advice here is to start a niche Facebook or LinkedIn. There is room for people to carve out niche social networks where people of similar interests can meet each other. I’m personally “linked in” at Entrepreneurdex.com, which has put me in touch with entrepreneurs and investors that I wouldn’t have otherwise met.
Again, the room for growth in this sector is for niche social networks. There probably won’t be a Facebook killer anytime soon, but there will be a lot of niche social-networking sites that collectively take page views away from Facebook. If you want to go this route, don’t try to take Facebook head on. Start by carving out a niche. You can always expand from there.
3. Facilitate user-generated content
Examples: YouTube, Flickr, Wikipedia
User-generated content is another way that companies have made a lot of money on the Internet. The big names here are YouTube, Flickr, and Wikipedia, and there are many more.
People are calling this web 2.0, and it’s really the way to go. If you can get people to contribute to a project, it’s like having free extra employees. There’s no way that YouTube, Flickr, or Wikipedia ever could have generated the wealth of content on their sites without user contribution. But with millions of users, they now have some of the richest content sites on the Internet.
Advice: No matter what you do, try to find a way to facilitate user-generated content. It’s like having thousands of free employees. Regardless of your business, you’ll want to find some way to capitalize on user-generated content.
4. Provide an online marketplace
Examples: eBay, Amazon, Craigslist, Alibaba
These companies have succeeded by bringing large numbers of buyers and sellers together. EBay has lost ground recently, but Amazon and Craigslist are still doing very well.
This business model is pretty straightforward. It requires getting large numbers of buyers and sellers together and helping them to do business. The website owner does the work by providing a website that helps sellers get in touch with buyers. Alibaba has done this by linking international wholesalers with international buyers.
Advice: If you want to go into this sector, start with something niche or local. For example, if you want to start an eBay type of business, go for a very specific niche. If your sights are set on starting the next Craigslist, shoot for a locally successful online classifieds. If you can win there, then you can always spread regionally and nationally. Facebook and Craigslist both started this way—they focused locally and then spread out nationally and globally.
5. Found an eStore
Examples: Amazon, Zappos, eBags
This business model may be the least exciting of all seven of these ideas, but it may also be the most realistic. Online retail is a straightforward game. You start a website and sell stuff that people want. As long as you can get people to your site and do a decent job presenting products, you can make some money.
Another reason this is a solid bet is that people buy stuff all the time. If you try to start the next big search engine, you’re hoping that there will be a market for the product you’re creating. But there’s no guarantee. With an eStore, you know there is a market for the products you’re selling. You just have to find a way to get a piece of the product pie.
Also, the number of people that buy stuff online is only going to increase. As the Facebook generation grows up, they’re going to make more and more purchases online. They have to. If they don’t, how will they keep up with all of their social networks?
Advice: This won’t be easy by any means (retail never is). Your best bet is to focus on a niche. Don’t try to sell everything to everyone. Find a focused set of products to sell. A good example of this is eBags. They focus only on selling bags.
Also, don’t attempt to be the next low-cost retailing leader. Amazon does a pretty good job doing this, and Wal-Mart is pushing their way into the online game. Try to find a niche of customers that want a specific type of product. It’s better to find 100,000 people that want your specific products than to go head-to-head with Amazon and sell everything to everyone.
6. Give people a new way to communicate
Examples: Blogger, WordPress, Twitter
All three of these websites do something simple—they give people a new way to communicate with each other. As simple as they are, nobody knew there was a need for them until they were invented (that also happens to be a characteristic of innovative ideas). But now we can’t live without them.
People use blogs to communicate ideas and sell products. Families set up group blogs to communicate with each other. And Twitter? Twitter boasted earlier this year that they have 190 million users, and Pew research estimates that 8% of Americans on the internet use Twitter. That’s a lot of people sending 140-character messages back and forth. I’m still amazed that someone figured out that 140 characters was a good way to communicate. It’s brilliant.
Advice: The thing to focus on here is how can you help people communicate faster and more effectively. Apparently email wasn’t fast enough, so we needed Twitter. Email also didn’t communicate with enough people at one time, so someone invented blogs. I have no idea what’s next in this sector, but someone will come up with another way to communicate.
7. Offer coupons to groups of people
So you may have noticed that there is only one company in this group—Groupon. I know there are others now that are very similar (like Living Social), but my head is still spinning that Google offered to buy Groupon for $6 billion. That’s right—$6 billion. And for some unknown reason, they turned Google down. I’m still trying to figure out why.
Anyway, these guys do something really simple and really well. They keep their product very streamlined. Here’s how their model works—“Do you want a coupon? Give us your email address and we’ll send you an awesome deal once per day.” It’s as easy as that. Trade an email address for super-awesome coupons. No complicated registration process or landing page or anything else. It’s impressively streamlined.
Advice: The advice to make billions for this is simple: if someone offers you $6 billion for your company, first ask if they’ll give you $6.1 billion because that’s an extra $100 million dollars. After they say no, tell them you were just kidding and that you’re completely cool with $6 billion. Then sign the contract as fast as you possibly can.
As far as serious advice, Groupon knockoffs are really hot right now. What Groupon does isn’t rocket science, and it could definitely be replicated with something focused like flights, hotel rooms, vacations, or something similar. And don’t forget, Google didn’t make the acquisition they wanted to make. They’re still on the prowl for a Groupon like service.
That’s it for the beginner’s guide on how to make millions, if not billions, online. Are there any other categories you can think of? Or any other companies that would fit into this list?
What do you think the next million or billion dollar idea will be? And more importantly, which company are you going to start?