Cheers,
gadgettechblog.com

You've hit the nail on the head. I've been focusing on this a lot more recently as well. There are too many people that are focused on getting the viral factor > 1.0 but they aren't focused on driving a targeted group of users to a substantial value proposition.

Your blog is a perfect example of this. While you may not have as much traffic as Techcrunch, you have an extremely targeted niche that listens to what you have to say. You provide an immense amount of value and in turn, you can generate potentially more clients (if desired) and more valuable connections.

It's time to focus on providing true value, not the quick buck. Targeted traffic > untargeted viral traffic. While the viral traffic can help I a much greater fan of targeted traffic and you're a great example of it. It's great to hear this coming from someone that it deep in the metrics though

Best,
Nick

I have always felt there are some nice analogies to how energy is conserved in physics.

Physical laws
1. Energy is a conserved entity. It can't be created or destroyed but it can be converted from one form to another
2. No engine is entirely efficient. Energy conversion is never 100% efficient
3. You can't build a perpetual motion machine (from 1 and 2). Energy put into a system is always greater than the useful energy that can be removed.

Mapping those laws to value creation / optimisation
1. Value is a conserved property. You can transfer value from someone's normal activities to your application by having them interact with it but the application has no inherent value. The *act of people communicating* adds value to Twitter, saving people time on accounting adds value to Quickbooks.

2. No application is entirely efficient. An application can convert some of the value it creates for a user into cash but not all of it. The application must generate more value for the user than it costs them to use it (either in direct fees or intrusive advertising). You cannot optimise beyond the value of the *utility* your application offers.

3. If you remove more value from the system than you add (spam users, add popups, charge them for things they weren't expecting), your business will not survive. You cannot create perpetual motion as a business. If you attempt to do so you will fail either because of lack of custom or because the authorities shut you down (equally true for Facebook apps).

I feel that thinking in these simple terms can really help a business make sure that it focusses on the user. You have to be creating more value for them than you expect or hope to extract from the business in cash.

The point is, you have to create models (whether those are quantitative or qualitative) about consumer behavior, and build your business towards these goals. Yes they are not accurate. Yes they are brittle. But combine these models with entrepreneurial judgement, and you might get something awesome on the other end

Thanks for the comment, hope all is well in NY

Building a product that resonates with people – that creates connection with a human being on an emotional level – requires an understanding of them on this level. And this is what you have to do if you want to create something amazing rather than simply useful.

Just as trying to create a product that has huge value using purely qualitative methods, goals and metrics is likely doomed to fail (might as well read entrails – would have the same odds of being accurate), doing the same using purely quantitative methods is (as you point out and for all your reasons) likely to fail.

We need to balance quantitative and qualitative methods and perhaps most importantly – we need to apply each type of method to the right decision, issues and points in the process.

I particularly agree with the insight that “Distribution-led approaches can lead to local maxima on value creation.” It's really hard to walk away from any, even modest, success. It's also the same reason so many successful people in big companies accept moderate success rather than the risk of starting all over as an entrepreneur