[ansonparker]

I was recently at a talk where someone rallied against this whole "just a feature" argument. They made a compelling argument that there's a fairly natural evolution you see many start-ups go through from feature -> product -> business.

The rationale being that you initially build some specific functionality you can't find in the market (feature), over time rounding this out into a product and finally evolving into a business as you understand how to monetize it and where opportunity for growth lies.

You don't need to have your business totally conceived on day one. And in fact, finding where the business lies (or whether you even want to grow your idea into a business) is something you'll have a much better understanding of after a few months of being out there.

Personally (disclaimer: I run the domain search site Domize - http://domize.com) I think it's wonderful we can launch these "just a feature" websites and evolve them into products or businesses over time (or not). These 'better mouse-trap' sites are a fantastic, low-risk way of generating passive income and if you can string a few together you can potentially get to a stage where you can live off them. At the very least, you've demonstrated the kind of initiative and creativity that will provide you with a great talking point on your resume.

Let's not forget, both YouTube (embeddable video for eBay auctions) and Twitter (group SMS updates) started as "just a feature" and evolved into billion dollar businesses.

[freejack]

I don't disagree. I probably should have been more precise than "its a feature". My real point was more "protect the real revenue stream". Doing all the hard work to find leads, qualify them, get the lead interested in converting and then handing it off to a registrar for a one time bounty is selling the potential short. There are a ton of ways this "feature" could be launched with a fully-realized revenue stream - just simply tossing it out back-ended by an affiliate program does a lot more for Godaddy than it would do for the OP.

I guess if I had a summary point it would be "don't be so quick to give away your customers..."

[ansonparker]

I see what you're saying, but there's a big issue in doing this with domain names - the margins are slim to none (at least they are if you want to be price competitive).

Whereas registrars are paying 10%-20% on sales affiliates generate.

You need to think about whether you can actually beat this margin on your own, taking into account overheads like payment processing fees, customer support, billing issues & fraud etc. Not to mention the hassle of it all.

That's why Beau talks about branching out into hosting below.

GoDaddy make money off domains because they have massive scale, recurring billing, and a hell of a knack for in-cart up-selling.

Personally, I don't want to get my hands dirty with any of that!

[freejack]

I run a profitable registrar at scale and can appreciate the comments about low margin, costs, competition, etc.

My point is simply this: don't underestimate the value of a recurring revenue stream vs. a one-time payout to your business.

With a strong product and good customer service, you can count on a customer relationship for a number of years allowing you to amortize your customer acquisition costs over a much longer term than an affiliate relationship permits.

That said, if you've got the stomach for arbitrage, then go for it - there's a lot of potential for the right business to strictly focus on lead gen and delivery. However, I don't get the sense that this is in the OP's wheelhouse. I have a bias that those with a product focus tend to operate with fatter and more sustainable margins on the basis that its necessary to support their development of the product. Marketing organizations OTOH would never start with a comment like "look at the product I built on the weekend, what kind of a business can we build with it..."

If you want to build a business that focuses on affiliate lead-gen, then this prototype is the wrong place to start. I mean, you might get there accidentally, but its definitely the long way home.