If 2005 and 2006 were the years for crazy startups forming around concepts that startups the week prior formed around, then 2007 should be the year when we start to see these companies disappear. The thing is though, when you start a company it is hard to know when it is time to hang up the boots because internally you might think that makes you a failure. That isn’t always the case, but how do you know when it is time for you company to throw in the towel? Here are some suggestions.
We were the first
If your reason for still existing is because you were the first social network catered to people who wear Simpsons underwear then maybe it is time to walk away. Being the first doesn’t mean you are the best or that you are even successful. Being the first means that you will be the first of your kind that people get to try out and that is basically it.
You can look back at your history and say you were successful partly because you had first-mover advantage, but just because you were the first out the gate that doesn’t give you a free ticket to continue on existing.
Nobody talks about you
When people enjoy something they use it and talk about it. When people hate something they talk about it…a lot. If nobody is talking about you then you know you have a problem. You can have a great service, but when people aren’t using it what good is it doing? If people don’t even care enough to hate your product, then why would people care enough to like it?
Or maybe the only time they do talk about you is when you get your 15 minutes of fame. That is still a bad sign.
First company to hit Series M funding
Lots of companies are beginning to enter their Series B & C funding rounds, but your company might be on round M by now trying to stay afloat. By this time your valuation should at least be at a cool $100 billion and the chances of a buyout are unlikely. There are three types of startups (I’m uber generalizing here) that I can think of:
- Ones that don’t need startup money (almost all web 2.0 companies).
- Ones that need a little bit of startup money (some web 2.0 companies).
- Ones that need a ton of startup money (almost no web 2.0 companies.
Unfortuntately we are starting to see a lot of companies that fit under Scenario #1, but think they need Scenario #3’s money. There are very few problems money can fix when your company is in trouble, so don’t confuse more VC Rounds with greater success.
We are X+1
Its a given that if you are building a startup you are probably taking ideas that already exist and either enhancing them or playing off of them, but what if you just do what everyone else does with maybe one more feature? You are screwed basically. Some online video startups have already conceded the throne to YouTube while others are trying to press on with a feature set that is either lesser, similar, or a tiny bit better, but not enough to persuade people to try it out.
If you are only X+1 get out of the game because X probably already won and the only person ready to take the title is X2.
If any of these apply to your company you might want to give it some though as to whether or not you want to keep on going. Look at the bright side, there are a million more ideas out there to copy.
Among the prominent services of internet is the commencement of online businesses and one can find affiliate marketing an outstanding online business. Establishing business on internet demands a successful ecommerce site which does needs powerful ecommerce hosting package offered by an outstanding web hosting company with good customers’ satisfaction record. One must confirm too that the specified web host should bear reliable web server in addition to offer credit card processing as well. While one should also keep in mind that the leading hosts offer wireless security as well as HTML assistance tool.
On Monday when I wrote about 37signals and other great Web 2.0 acquisition bait one of the general observations that was made was that most of the companies rely on advertising to get by. It seems that everyone is in a rush to add as many users as possible to their applications and services that they don’t bother with a paid model and decide to rely on the advertising route. So the question is how hard can it be to get users to pay if they already find your service valuable?
Could YouTube offer a pro version that provided you with more tools and a greater chance to gain exposure with your videos? Maybe they simply add pro accounts that allow you to upload larger movies ala Flickr.
Looking at a lot of Web 2.0 services it is kind of surprising how none of them provide a pro version for any of their services or basically any special type of service that would entice users to pay. Now some services and applications do very will with the advertising model. Facebook is no slouch with bringing in revenue, but they have groups and communities that target niches that many advertisers are going after.
WordPress.com does an excellent job of this by providing you with some excellent basic services that can become greatly enhanced by paying them a small fee. From last that I heard these services helped push them into profitability, but I can’t say if that is still the case because so many new people have signed up since then.
Do you think that companies fear that users won’t pay for their services? It does require a certain bit of bravado to think that you created a service so good that people are willing to pay for it. If you create a strong enough community though don’t you think many of the members would be willing to pay for something that gives them just a little bit more? This year I am definitely looking for the companies to take that next step and begin to integrate multiple revenue streams into their systems.
This is one of those fancy paid reviews brought to you through Review Me. If you know me you know you are going to get the real deal.
I have been using Text Link Ads on this site for a couple of months now and I am actually surprised at the amount of people that don’t use this service to make money with their sites. There are a lot of different ways you can go about making money with your sites, but there aren’t many where you can paste some code and walk away and not worry whether money will come in or not. This is exactly how TLA works.
What I Don’t Like
When I said that you paste some code on your site and walk away I really meant that. While this is good from an ease of use standpoint it is not so good if you want to be in control of the pricing for your site. TLA uses their own algorithms to determine the price they will charge for links on your site and you aren’t given an opportunity to offer any input. Considering that pricing relies on the popularity of your site, Google PR and a couple of other factors this might not work out so well for sites that have yet to establish themselves.
For sites that are well-established you could probably make more per text link by selling them yourself, but I called TLA passive income for a reason. If you don’t have the resources you might not reach a large enough base to find companies willing to advertise on your site, but if you do then you might be better off going the independent route and collecting all of the fees.
If you look at the sites that have paid for a spot in the sponsors list, you will notice many of them you have never even heard of. I’m still trying to figure out what “Warntex Berufsbekleidung” means, but these are the sites that you will get through TLA. The majority will be within your site’s niche, but you might find some stray cats here and there. Fortunately you have the option to decline any that come your way.
What I Do Like
I’m a busy person who prefers to work on great content and not run around looking for companies to advertise on this site. Sure I will do a post here and there explaining the deals I have, but to really be successful and make money you have to hit the streets and go out to find people who are willing to give you money. Text Link Ads acts as my text link broker and they do all the boring work for me.
Instead of having to worry about if I am going to make X amount next month, TLA has provided a stable revenue stream for this site that Adsense can’t supply. What’s even more important is that it acts as a supplemental source of revenue alongside paid graphic sponsors and Adsense. This means I don’t have to worry about all my eggs being in one basket.
While I’m not a fan of the UI for the backend it is easy enough to get through and you should have no problems setting them up on your own site.
Because of TLA this site brings in extra money every month that it wouldn’t have done otherwise and that has helped a lot. Again if you are very strict with pricing and like to have control over everything TLA might not be for you, but if you like to focus on other things while having another revenue stream on your site I highly suggest you take a look at them. If you have any questions don’t hesitate to ask.
Last week we had an interesting discussion on what resolution you will design for in 2007 and the general consensus was that we are moving to bigger resolutions. However, with more and more devices becoming web-enabled it seems that they aren’t moving along with us. I know many of us have spent so much time waiting for the opportunity for the majority of users to move past 800×600 that it can be frustrating seeing a whole new batch start to use 640×480 again, but that is what is happening.
How do you handle these devices? You can argue for liquid designs, but in many cases if you have a 468×60 graphic ad on your site, it is not going to resize and therefore liquid design does not offer any help. What’s funny though is that these devices want to act like your everyday browser so they display websites just as any normal computer monitor would so often times you are left with scrollbars and headaches.
In this case is it the designer’s responsibility to create five different designs for 5000 different devices or do designers need a bit more help from the device makers? Maybe I’m out of touch here and there is an end-all solution for this problem and if so I’m always willing to listen.
Of course with the new iPhone and its Safari integration a whole new can of worms opens up.
If you are a geek on the web you know that tomorrow (or today depending when you read this) Steve Jobs will give the opening keynote for MacWorld San Francisco 2007. The web is abuzz and it is hard to visit a site that doesn’t have the latest rumors and predictions about what is going to be announced. Rarely do we see a single company generate so much buzz around one event without having to lift a finger. The brand alone generates the buzz and the community builds it up.
Name a Web 2.0 company that has the same leverage even on a smaller scale? No matter whether you want one or not your company develops a brand the day it is launched. The brand isn’t the same to everyone, but there are certain qualities of your brand that the majority of people will share. I think it is safe to argue that the brand around Apple is mostly positive and because of this people talk about MacWorld with the anticipation of Christmas.
What’s interesting to note is that another large tech event is happening this week, CES, and Bill Gates gave his keynote yesterday. How much have you heard about that?
Even though I have already pimped them out today, the only other company that comes to mind that has products and services that people flock around and can stage an event that gets people buzzing is 37signals. Granted, compared to Apple they do things on a much smaller scale, but you can see how they are built around a strong brand and community. Today’s Web 2.0 companies want to be built around VC dollars and TechCrunch links.
Anyone can create a Digg clone, but you can’t duplicate the community. Anyone can create a mp3 player, but can’t duplicate the Apple experience of an iPod and iTunes. It isn’t always about specs and the latest features. You don’t have to be bigger and faster than the competition. You just have to do the important things better. Apple does that and while you have the largest tech companies in the world converging at CES, it is one tech company that is stealing all the attention this week.
And if they don’t announce an iPhone tomorrow to end all of the rumors please end me.
If you read Wired Magazine, this month you would’ve seen a one-page article (page 056) on the top 10 Web 2.0 acquisition targets for 2007. In order the list was:
- Facebook
- Digg
- Techmeme
- Wikipedia
- Zillow
- Technorati
- Wordpress
- Feedburner
- 37Signals
- Riya
Looking at the list 37signals is the only one that stands out as a subscription-based company. They are making real money over fake money and you can count all of their employees with your fingers. The only investment that I am aware of was done by Jeff Bezos and that was more of a partnership than a traditional VC stuck up your ass type of deal.
So why not sell the company? To me that is the wrong question. The right question is why sell the company when everything is going so well? They will be releasing more apps this year and therefore increasing their reach and revenues and because of their strong userbase they can almost do no wrong.
You would think that the only reason that they would sell the company is because they are tired of running it and not a moment sooner. You can’t blame them, they run their own show and control their own profits. How many other online companies today can vouch to do such a thing? And even though you can create their apps on your own for free and some people have done such a thing, the well-oiled machine just keeps on moving.
So if you were Jason Fried, do you sell the company and go live on the beach or do you keep the good times rolling? If you do continue to keep chugging along when do you decide to sell? You can’t run a company forever.
A simple weekend exercise that everyone can participate in (hint hint). If you could kill off three Web 2.0 companies, which ones would you pick? My list would be:
- Myspace. Don’t get me wrong, I love the concept of social networking sites, but the designer inside of me dies a little each time I visit a page. And please excuse me for putting Myspace under the Web 2.0 label.
- Facebook. The faster it dies, the faster I can stop reading stories of them turning down gajillions of dollars which causes me to punch walls.
- Technorati. I love the idea of what it can be, but it never quite gets it right so I’m left frustrated every trip.
What would your three look be?
When Ryan Carson announced that he was putting DropSend up for sale I was very interested to see how it would work out. Here you had a service that had a decent user base that was willing to pay a monthly fee to use. In comparison to other Web 2.0 applications that attempt to live off of Adsense revenue, DropSend showed real potential to be a key component for any company looking to enter the file-sharing space. Two months later and DropSend hasn’t found a buyer yet.
In an interesting post last month, Ryan tells the story of a failed acquisition bid. If you are interested in business at all I suggest you give it a read. As you can see DropSend is in the black so it makes sense for it to draw some interest. The failed acquisition involved a competitor who wanted to use the service as a marketing ploy, but didn’t feel that the $1M asking price was worth it. Ryan doesn’t mention whether there were any negotiations for a lower price, but I am intrigued as to why a service that makes money can’t find a buyer and sites that have no revenue or are deep in the red get scooped up all the time.
Lots of services get bought because of their user base, but how many different ways can you monetize a user base that the original creators couldn’t think of themselves? Measure Map got bought before it was even released with no revenue model in place. There are other examples sprinkled throughout the web and hopefully you get the gist of what I am saying.
Maybe the asking price is too high, but this can be negotiated so what is the real problem here? Do companies only care about users and hype now while ignoring core business principles? I don’t have the answer so I’m simply left wondering.
I have been reading all of the 2007 Predictions entries that have come across my desk and one of the predictions that seems to make the lists more than any others is that RSS will make it to the mainstream. I can’t help but think how completely and utterly wrong this is. While in the past we have lauded RSS as the next great thing after email, it really is nothing more but another way to read sites. In fact, RSS has been around in one form or another for a very long time.
AP Wire Services act like RSS syndicating their content to newspapers and websites. ESPN has a scrolling ticker at the bottom of the screen that keeps you updated on scores and news. Have any of these revolutionized the way people go about their lives? Not really so why should RSS be any different? RSS is very useful for finding out when a site updates, but that is no different than actually going to the site itself to check on updates.
Email is completely different since it allows people to communicate with one another while RSS just acts as an asynchronous communication tool. Every major online communication breakthrough (IRC, IM, etc) succeeded because it handled communication in a many-to-many relationship. RSS on the other hand is simply a one-way 1-to-many relationship and this is what will prevent it from ever making it big and changing the lives of people.
I do think that sooner or later every technology we use that has access online will incorporate RSS into its services, but not necessarily behind a feedreader. Weather updates can be sent via RSS and nobody would care. People don’t go to sites searching for the orange feed button, they go looking for content. Besides, why site updates can be simply sent to your inbox why bother with feedreaders anyways (I’m speaking in general here since I use Google’s Reader).
As we try to push forward with the web we need to let go of the idea that every person on the web will grasp the idea of what a feed is. Instead, find ways to use feeds that don’t break the user’s experience. It doesn’t matter to them what is under the hood as long as the car moves.
If any one looking for web design service provider company who can also provide you web hosting also then there are lots of internet companies who are also providing affordable services with the Flash movies, some of these companies can also provide services of marketing such as blog marketing or Email marketing, any one can also get software developed with the C for his use.
Over at 9rules Notes, there is an interesting discussion about the resolution that many in the design community design for. I believe you will find that more and more people are using 1024×768 as their base resolution as it allows for a bit more freedom with regards to how to display content. Of course this also means that more and more people will come up with reasons to clutter designs that don’t need anymore elements added to them.
So do you plan on changing what resolutions you design for in 2007 or is it just going to be the same old thing all over again?
