I just read Mark Hendrickson's post-mortem for Plancast on Techcrunch and the section on sharing frequency hit a chord.
When I meet startups, I mentally run their product or service through this test, which is the test of frequency of product usage by their customers. Simply put, if the frequency is high, then their product idea stands a greater chance of surviving in the marketplace. If the frequency is low, then the probability of dying is much much higher.
What do I mean by frequency of product usage?
When a user uses a product tens or hundreds of times a day, this is the dream - to work on a product that is so necessary by a large customer base that they need to use it that much! An example of this would be email - too bad it was created and set free to the world because someone could have made a lot of money on that, or at least in the early days.
Once a day is not bad either. Once every few days still OK. I read the New York Times email digest and website once a day generally, so I can remember to go there. What about the other news sites? Hard for me to remember which ones I do read when I visit them so infrequently.
Once a week - hmmm - getting to that limit. Once every 2 or more weeks and I think you're in trouble.
That's because people forget very easily what services and products they use, especially in this crowded world of me-too products. When your memory is sketchy, it's easy for someone else to hop in there and supplant you.
Take travel services for example. How often do people really go on vacation? Normals tend to go maybe once a year, if that. If I find your site, use it to plan a vacation, and don't worry about going on vacation until next year, do you think I would remember to come back to you? If you're a startup, the odds are against you that you'll even be alive by then.
This goes for both consumers or enterprise customers - if a business customer doesn't find a daily or constant use for your product, then how can it find some justification for buying your service?
That doesn't mean that what you're working on shouldn't exist, or couldn't become a big business. The big problem is that you're a startup with limited resources and survivability and some lower frequency services should really be done by more established companies. You, on the other hand, need traction and revenue as fast as possible before you run out of money. This is why frequency of usage is critical at early stage; if you have a product that people only occasionally want or want at special situations, you'll never be able to build enough customers before you die.
So you have three choices. Either you must work on something that has a high frequency of usage, enough to attract users who find you useful enough to use often enough to keep coming back; OR you must find a way to buckle down and exist long enough for enough customers to sign up and generate enough traction and revenue for you to survive as a company. There is one other possibility and that is to add some high frequency elements to your low frequency of usage service to keep interest in and around your main service, despite the fact they may actually use the main service only intermittently.
Any of these could work and convince me to invest but working only on a low frequency of usage service in today's super crowded marketplace definitely will not.