Back in 2009, I attended the Ryan Carson produced Future of Web Apps conference in Miami, Florida. There 37signals co-founder Jason Fried spoke an interesting truth that’s resonated with me ever since. He told everyone to “monetize your sawdust.”
When a lumber company creates wood boards, there’s sawdust that falls to the factory floor. That sawdust gets swept up and used in the creation of other products. The lumber company is monetizing their sawdust.
He challenged everyone to look at the by-products of the work that they’re doing for their business and look at ways they could potentially make money or generate new opportunity off of them. For 37signals, the examples were the programming framework Ruby on Rails and a book that was essentially a group of their past blog posts.
When I was at Clearspring (now called AddThis), we were working on getting our sharing tools on every website we could. Over my tenure we saw the usage grow from 200,000 domains to over 11 million (and its even higher now). While data about a specific publisher was never made public because it was private to that publisher, we realized we had all this interesting aggregate data about where and what people were sharing and searching for online.
That aggregate data was incredibly marketable. We took the aggregate data about the state of the different social & sharing services on the market and went to the tech media. They wrote about it and the story always talked about how the data came from AddThis. Initially, we were just taking screenshots from Microsoft Excel charts. Eventually, I got our creative director looped in and he started making us super sexy infographics, which the media ate up even more.
I didn’t have a marketing budget. I wasn’t trying to arbitrage Google or Facebook ads in order to drive traffic. I was monetizing our sawdust. Our aggregate data was a view on the world that no one else had. It was great. We’d do a data-related announcement during the lull between product announcements. We wanted everyone talking and thinking about us all the time. And, it worked.
I’ve had the pleasure of working with and mentoring a number of different startups. One of the most common pieces of advice that I give is to “monetize your sawdust.” Look at the by-products that are created from the production of your core product. There’s probably something there that you can sell or use to generate excitement/awareness which will help make you more money.