> You've stated this as a fact but small businesses thrived before Facebook, so I think it's fair to assume they'll thrive after Facebook is long gone, absent other evidence.
The unit economics have totally changed though as there are many more businesses that exist now that simply could not have done in the old model.
The previous company I started was a direct to consumer UK heating product. In the old world we would have had to go through big shed retailers and lost 50-60% margin with 90 to 180 day payment terms and would have had to stock all of their stores from day one. The expense would have stopped that business from ever being started.
With digital platform advertising we could specifically reach our target demographic, loose only 20% margin to customer acquisition and postage costs (so afford to start with smaller manufacturing runs), get paid the day we sold the unit so cash flow positive, hold much less stock and order from our suppliers in response to demand and run our own just in time factory.
The business was much smaller that it would have had to be in the previous world, much less risky and, frankly, only viable thanks to very targeted advertising that allowed us to tell our potential customers about our product when they most needed it.
In this kind of discussion people seem to assume the product spectrum is binary. It's either useful and so would thrive regardless of advertising or useless tat that only exists thanks to digital platform marketing.
That just isn't the case, sure - those ends of the spectrum exist but there is a vast array of businesses in the middle that could not have existing in the old world and aren't useless drop shipped tat.
The unit economics have totally changed though as there are many more businesses that exist now that simply could not have done in the old model.
The previous company I started was a direct to consumer UK heating product. In the old world we would have had to go through big shed retailers and lost 50-60% margin with 90 to 180 day payment terms and would have had to stock all of their stores from day one. The expense would have stopped that business from ever being started.
With digital platform advertising we could specifically reach our target demographic, loose only 20% margin to customer acquisition and postage costs (so afford to start with smaller manufacturing runs), get paid the day we sold the unit so cash flow positive, hold much less stock and order from our suppliers in response to demand and run our own just in time factory.
The business was much smaller that it would have had to be in the previous world, much less risky and, frankly, only viable thanks to very targeted advertising that allowed us to tell our potential customers about our product when they most needed it.
In this kind of discussion people seem to assume the product spectrum is binary. It's either useful and so would thrive regardless of advertising or useless tat that only exists thanks to digital platform marketing.
That just isn't the case, sure - those ends of the spectrum exist but there is a vast array of businesses in the middle that could not have existing in the old world and aren't useless drop shipped tat.