PLEASE READ THIS FIRST! This post attracts a lot of readers who are obviously interested in starting their own company. If you're thinking of starting a new media business, come and check out www.jigsawuk.org - it's our wiki for British new media startups, where you can check out other entrepreneurs' latest projects, find networking events to attend and get up to speed on funding opportunities. Even if you're not based in the UK, JigsawUK's experience section contains a wealth of useful resources. Any questions? E-mail colin (at) futurescape.co.uk
The original post...
What kinds of businesses are teens launching online?
And how can official sources of information and funding support them?
Just as the first home computers allowed teens to start programming and selling computer games, access to the Internet is enabling them to launch their own money-making ventures.
Tom Foremski, a former FT journalist who writes about business in Silicon Valley, has blogged about how his 18-year-old son Matt makes money online. Matt reads his 11-year-old sister’s magazines to find out what’s hot in teen culture, buys up matching domain names and makes money from advertising. What’s remarkable is how much money he makes compared to his father. Foremski contrasts his own, well-regarded web site with his son’s domains:
“Silicon Valley Watcher, a web site that in some months has nearly 3m hits and more than 850K unique page views [makes] $20 per month and Matt makes $310 [from 50 domain names].”
And Matt is far from alone. His friends are making money from setting up web sites and blogs for small businesses.
It’s not an entirely new phenomenon. British blogger Ben Metcalfe recalls his own online business from the 1990s:
“When I was 17... one lunchtime between my Physics class and my Maths lesson I bought the domain fuckyou.co.uk and then tried to work out what to do with it.
“Knowing that Internic (the US government dept that looked after com/net/org domains) were not allowing profanity in their domain names, I realised that the Americans (the main users of the Internet) would love the opportunity of using the domain. So I decided to set up a free email service off the back of it. yourname@fuckyou.co.uk, etc.
“At one point I had 50,000 subscribers, and selling T-shirts with the logo on at £12 a pop!”
Matt’s and Ben’s ventures represent two different business models. Whereas Ben had to supply a real product - the T-shirts - Matt can run his business as an online-only operation, making money directly from Internet advertising and affiliate systems.
What factors encourage and enable teens to become successful online entrepreneurs?
- The spare time to undertake new ventures
- Market knowledge - Matt’s understanding of teen culture and domain names
- The Internet itself allows any small enterprise to scale dramatically, regardless of who’s behind it
- Automated payment systems, such as Google AdSense, can readily pay them for their efforts
- They’re already media producers - see skateboarders videoing each other in the street - and now online media distributors such as revver.com offer a revenue share that’s an ideal opportunity to make money from video of your friends having funny skateboarding accidents
- The money required to pay for web hosting and related services has fallen dramatically over recent years, lowering the barrier to entry - see the following example from US teen investor Kjell Olsen
Kjell explains his reasons for investing in web hosting company textdrive when it offered founder users lifetime hosting for a one-off $200 payment.
“I got lucky and bought into textdrive, a web hosting company, as a member of the VC 200. I decided that $200 for the life of the company was a gamble I was willing to take. Textdrive got going and kicks ass. But that’s the real reason for this site – lots of storage and bandwidth and really nothing to do with it but play.”
Interestingly, Kjell is also a self-taught programmer. If he wants to launch his own online business, he already has the tools to hand.
Potential limiting factors:
Getting paid
Some payment and affiliate systems require a legal contract and therefore someone to sign who’s legally an adult
Parental concerns
At an Internet business conference recently, one father explained that he was preventing his teenager from making money online. The teen writes a popular blog about a specialist subject that has the potential to earn money, but as she’s too young to sign the advertising contracts, he was refusing to do so, as it would give her an independent income. Note also that the video distributor site revver.com has an easily accessible adult section that might concern parents.
How can teen entrepreneurs be encouraged?
Assuming there’s a role for government and other official advice, support and funding agencies (eg The Prince’s Trust), any of them faces several challenges:
- Finding the teens and making contact with them
- Convincing them that the business expertise on offer is relevant to them, particularly when the teens may well know more about online business than the would-be advisors
- Keeping abreast of how the teens’ businesses work to ensure that the advice is indeed relevant
References
Matt Formeski’s domain business
Ben Metcalfe’s e-mail and T-shirt business
Investor Kjell Olsen
Video distributor Revver.com
Find action figures, urban vinyl and collectibles at Mad For Toys - the toy search engine
