A few months ago I got together in the old YouCastr offices with a big whiteboard, a few pizzas, a few packs of beer, and some entrepreneurial product folks to chat about various concepts (or schemes) and think about web trends in general.
One of the concepts that emerged, admittedly following some mental lubricant, was the “Lower Right Quadrant”. Being a former consultant, I love frameworks and 2×2 matrices. So as we were chatting about ridiculously profitable dating sites, and how hard we have all worked to create business that don’t throw off nearly those levels of cash, something hit me. Here is that framework:
The framework looks at profitability vs. world impact. In the top right are profitable companies that impact the world for the better, like CleanTech (successful ones), and possibly Google (when they’re not being evil). The upper left quadrant are necessary humanitarian efforts that might not be very profitable, either by design (e.g. non-profits, government), or by market conditions (e.g. healthcare). The lower left quadrant is where most companies end up, slightly profitable or unprofitable, with little impact on the world. And finally, the Lower Right Quadrant, is where silly and salacious companies make a ton of money without attracting competition from well-intentioned entrepreneurs looking to make the world a better place.
Interestingly, most startups think they’re in the upper right quadrant, and have audacious goals to change the world and enrich themselves and their investors. But most startups are actually in the lower left quadrant, making incremental products that end up not being very profitable.
We continued our discussion, thinking about opportunities in the LRQ, ranging from a Swoopo model for dating, to social games, to online pawn shops. One challenge we faced was realizing we weren’t really in the target market for any of the LRQ products we brainstormed, and had to continuously think outside of ourselves (or have a few more beers). Another challenge is to get excited about something that is not inherently beneficial. I do actually want to help the world, but there is probably some supply-demand type curve that relates profitability to world-changingness, i.e. the less utilitarian and world-changing the product / company is, the more profitable it has to be to motivate me to continue working on it.
So, before you get all starry eyed about your next big world changing money-printing concept, think LRQ. And get the shirt in the meantime.