The disclaimers first. I am (still) an unadulterated geek at heart who knows absolutely nothing about business. Yes, corporate environments have modified my thinking: I look at effort vs. value these days much more than I would like to, especially when there's a beautiful and elegant solution at hand. Still, I am clueless when it comes to many of the questions which arise when one starts a business. That's in part, why this post is in the first place.
Startups on the internet. It surely surprises me still that Google could amass a fortune and be so valued just by making revenue out of advertisements. I am then told that I have no idea about the scale of reach the Internet provides. Point noted. I then find that the new businesses do nothing to monetize, while accruing losses. Isn't that something so fundamentally wrong? I am then told that this should happen much later in the process, when you have a sizeable user base to talk home about. But what still baffles me is how some of these startups are so very dependent on some lack of a feature out there in the internet. Don't they think about what happens when that feature finally appears out of the blue, one fine day? They obviously do, just that it doesn't strike me.
Take for example, Splicd. This service tried to improve Youtube by allowing the capability to share parts of a video as a link. Neat and much needed. Till the day when youtube got it for themselves, with surely much lesser effort. Where does this business go then? Or for that matter, the more recent Surf Canyon, which tried to 'improve' Google search results by trying to monitor what you end up clicking ultimately, and 'promote' them. Won't Google's newly launched 'SearchWiki' sound the death knell to them?
In general, there are so many of these services which try piggybacking on an existing phenomenon by implementing a feature they don't provide, and try making a business out of it. Twitter, especially, is the root for many of them. If they fail, it's the end of them. If they succeed, it sounds likely to me that the parent business would end up implementing them, and that would be much more integrated than this. Sounds like a no-win situation? Or is it just my lack of business acumen and training showing?
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