Rule No.1: Pick a market where the competition charges money, and do it for free.
Rule No. 2: Keep your costs low. Really low.
Rule No. 3: Use Web 2.0
Rule No. 4: Relax.
Most people looking for dates online paid hefty monthly fees for personals ads before entrepreneur Markus Frind came along. His site, Plenty of Fish, undercut the competition including Match.com. In that way, Frind was quickly able to grab market share. He's now tops in the U.S., according to Hitwise, a firm that measures website traffic. And better yet, some of Plenty of Fish's biggest advertisers are the very same paid sites against which his business competes.
To make "free" work as a business model, you've got to be ruthless about limiting your spending. Frind's website is ugly by most standards, has fewer features than competing sites, and is rarely updated. But that's the point: Frind has found that it's better to stick with a bare bones website than to blow money on redesigns and elaborate features.
In the past few years, a new ecosystem of free services has sprung up on the web, led by Google's AdSense, which Frind uses to sell and place ads on his site. Ad networks generally bring in less revenue than a dedicated salesforce would, but Plenty of Fish is able to use them for free and the amount of work he needs to do to serve their ads is minimal.
That's serious business advice. Frind thinks that entrepreneurs spend too much time and money doing work for work's sake. If you do very little, you're less likely to screw up what you've already got. Frind has kept his staff small by design--he has only three employees, who handle customer service--and he personally works only about an hour a day.
