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A16Z's Connie Chan On Outgrowing Advertising As A Business Model
Mar 3, 2019
Connie Chan, general partner at Andreessen Horowitz, discusses the shift in business models for internet-based consumer tech companies, the differences between the monetization strategies in China and North America, the challenges faced by social media platforms in diversifying their revenue models, and the potential contenders for advertising diversification like Amazon, Walmart, and Twitter. She emphasizes the importance of offering users choice and self-expression in monetization models and highlights the wide array of tools available to entrepreneurs in the space.
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Quick takeaways
- Chinese companies have successfully moved beyond a heavy reliance on advertising as their initial default strategy, leading to diversified revenue models and better user experiences.
- Companies like Amazon and Twitter have the potential to revolutionize advertising and explore alternative monetization methods, utilizing their knowledge of consumer behavior and influencer communities.
Deep dives
Chinese market: More mobile-first, less reliant on ads
In China, companies have moved beyond a heavy reliance on advertising as their initial default strategy. Chinese companies have been more thoughtful in monetizing their platforms due to the mobile-first nature of the market. Display ads and search click ads don't work as well on mobile, leading to a greater emphasis on alternative monetization methods. Furthermore, China has a different payment ecosystem that allows for microtransactions, which are gaining popularity. This mix of factors has resulted in a more balanced revenue distribution for Chinese companies, with advertising being just a small piece of the pie. The Chinese market sets an example of how consumer internet business can work with a diversified revenue model.
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