70 - 20 -10
I like to read magazines. My two favorite are Wired and Business 2.0. Besides being entertaining they are jam packed with valuable and relevent information for online entrepreneurs like me.
There has been a lot of discussion about the article on domain investing in this month’s Business 2.0 came in the mail. There was another article that caught my attention even more.
There was a very revealing interview with Google CEO Eric Schmidt. In it he discussed Google’s “70-20-10″ rule. That is, 70% of time is spent on their core business (Adsense, Adwords, and Search), 20% spent on related projects (Froogle, Google Local, etc.) and 10% spend on new businesses (Blogger, Google Talk, etc.)
After reading the article I divided all of my projects and businesses into 70 - 20 - 10. 70 is very clear to me. There is a single site that is doing very well. I had a little trouble with the 20 and the 10. Clearly my other sites fall under the 20, but what about my consulting and design side-jobs? From a revenue standpoint, my consulting and design jobs might even belong in 70.
I am going to be testing this rule out. Already, I have made some big changes in my priorities. I’ve been spending too much time focusing on things to bring in additional revenue rather than the things that are bringing in the majority of revenue right now.
The bad news is, this blog falls under catagory 10. Considering there are other projects under 10, that means this blog comes closer to 2% or 3%. That means out of a 14 hour work day I can’t even spend 30 minutes on this blog. Just writing this post has used up all of my time. Since today is Thanksgiving here in the US, and I have to take a break to go eat turkey, its going to be more like an 8 hour work day.
Think about how you can apply the 70 - 20 - 10 rule to your business. (and pick up the newest copy of Business 2.0.)
This propoertion perhaps works well for an established business, but for a developing business the priorities might be different. I would agree that focusing on what you know works is important and it is important not to get sidetraked by new projects - howere for a web publishing business model, the split might be more 50 - 25 - 25. Those new ideas might just be your daily bread after a google algo change!
Hope the turkey was good!
Comment by Charles — November 25, 2005 @ 6:44 am
This is true, my most successful site right now I developed several months ago. Completely unrelated to anything else I’ve done.
On the other hand, I have a few projects that consumed a full month each, and ended up making me very little. Granted, I learned a lot in the process.
The “good” site I was talking about, I took a very different approach. I spend a week building it as a test. When I saw that the results were good, I went back and worked hard on it and invested money in content and apps for it.
Comment by Andrew — November 25, 2005 @ 1:04 pm
[…] Here is the problem with diversification: even though you are working in a related area it isn’t directly contributing your main business. Last year I got side tracked on other projects that lost money. Worse, I lost time. This happened because I devoted entire months to projects rather than working on them on the site while focusing on the things I really was good at. This is my solution to that problem — keep your foot in the door, but don’t go all the way inside. Google uses the 70-20-10 rule (incidently my top searched keyphrase for this blog.) What this means is that Google employees spend 70% of their time on the core business (Adwords, Adsense, Search), 20% on related projects (Froogle, Google Local, etc.) and 10% on new businesses (Google Talk, Google Maps etc.) If my advertising earnings bottomed out tommorow I could still pay my rent, my hosting, and all my other bills. It would be a pain in the ass, but it would be done. If you are risk averse and can’t bare to leave your current job (I know a lot of web site owners fall into this area) consider this approach. The truth is, you will be safer than a job where you could get a pink slip tommorow. Short of a worldwide economic collapse you’ll do just fine. […]
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