Over the years, we've met with thousands of entrepreneurs who were starting consumer Internet businesses. And as we listen to them describe their business, I find myself categorizing the opportunity. One of categorizations I've found most helpful has been to determine whether the company is looking to help people "save time" or help people "kill time".
Companies like Youtube and Zynga entertain people (and help them kill time) -- while companies like Google, LinkedIn and Mint.com are great utilities and help people save time (but users rarely visit them for without intent or for for pure entertainment). At First Round, we've funded both:
Why create such a distinction? Well, I think it is helpful in looking at how the businesses will operate -- and what metrics you care about. It's much easier to measure the impact of a Kill Time company than a Save Time company. For example, in a kill time company you'd really want to see strong DAU (daily active user) counts and really long session lengths. Yet short session length might be a good sign in a "save time" company. If it took longer for Google to answer your question -- and you spent more time on their site searching -- I don't think that Google would view that as successful. The fact that Mint.com allows you to manage your finances quickly and easily is a good thing.
I think it's typically much harder (for me) to indentify which "kill time" companies will be successful at the seed stage. The Kill Time companies are successful because they are able to entertain users -- and it's very tricky to identify good entertainment from a Powerpoint. Save Time companies, on the other hand, are a little easier to evaluate pre-launch -- because these companies have a clear value proposition that can be measured in advance. When we first heard of Uber, for example, we were able to understand the value propisition and user benefit immediately.
Finally, the monetization strategies of Kill Time companies typically require much larger customer bases / audiences to be successful. These companies frequently monetize through advertising or low-price virtual transactions -- both of which require significant volume to generate meaningful revenues.
This is not intended to be a "perfect" framework -- and I can easily identify several exceptions -- yet I've found it helpful to keep in the back of my mind when I'm meeting with entrepreneurs. (And there are rare times where companies can be in both categories. Twitter is one such example. There are use cases where Twitter can be the perfect way to kill time -- yet it has also become on of the most efficient ways for people to stay current on the news.)