Alexa vs. Alexaholic/Statsaholic.
Google Maps vs. Platial, Frappr, Flagr.
Expect more of these folks.
The only thing that is different between now (2005-present) and then (1994-2001) is that then, the business models were unsustainable because the money supporting it all originated with venture capital, which converted into advertising, with it all being justified by a public offering exit. Of course, when the Nasdaq market crashed from 5,000 to 1,500 in a matter of months, the public’s appetite for Crap.com fizzled, so VCs stopped investing in advertising online. It was that simple: a domino effect that made the house built on sand crash down on its own weight.
Today, what’s changed is the cheap hardware, open software and turn key advertising. Truth is that the turn key advertising models only generate revenue with scale. The hardware is cheap, sure, but due to the low barriers to entry and the open source software en masse, whatever you are thinking of doing, someone else has done. And yet, no one has a clue how to monetize it, because Ad Sense sucks unless you have decent traffic.
The companies’ API - be it Amazon’s, Yahoo!’s or Google - only added to the fuel in the sense that in the event you had traffic, they would squeeze you out. Case in point: Alexaholic. Amazon.com bought Alexa and forgot about it, someone came along and added some really cool features to it, and Amazon.com did what any sane company would do: erase it from the Web’s memory. Hope your 15 seconds were fun. Please don’t misinterpret me: whomever was the bloke behind Alexaholic was smart, but he was wasting his time, energy and money (as measured by opportunity cost).
In other words, much the same way that in the pre-bubble days companies financed an idea from concept to IPO in days, let alone months or years, today entrepreneurs are suckered by large publicly traded corporations passing themselves off as socialist entities to do their dirty work, thinking that “if we build it, the large companies will come… with their check books.”
What Alexaholic, Fraxlk, Crappo and Deflinger have proven is that only a delusional sucker would build an application on a publicly traded corporation’s API and expect to reap commercial success. In other words, if and when you wish to use a company’s API, understand that it’s a short-lived, double-edged solution. It’s a hobby. If you don’t see that from Day 1, get out of the business landscape because you will regret the time and energy you spent on your project.
When we built MetaMojo.com in the spring of 2005, it was a hobby of mine because I was bored at work and needed a challenge. MetaMojo.com was a domain-specific vertical search engine. To keep costs down and prove the concept, we used Yahoo!’s API. Google subsequently opened its API, too. But I was convinced that Google would steal the idea, so I went with Yahoo!, knowing that Yahoo! was slow and disorganized. I was proven right, sort of. More on that below.
But, the fact is, for months I had to contact and convince Yahoo! - namely Toni Schneider, who landed at Yahoo! after it bought Oddpost, and who has since left Yahoo! and is now at True Ventures - to turn our project into a commercial license, because we hit the daily limit of 5,000 queries pretty much from Day 1. Eventually, Toni was a gentleman and scholar and granted us the license.
Problem? I spent months convincing him of the value of vertical search. Essentially: give us the right to build a business on your platform, because it’s lucrative, potentially. Result: “Sure, sucker, build it, and if we see results we like, we’ll steal the idea.”
They did:
Eighteen months after we launched MetaMojo.com, Google launched Go-op.
Twenty-four months after we launched MetaMojo.com on Yahoo!’s API, Yahoo! launched Alpha.
In the fall of 2006, we swapped out Yahoo! for a proprietary index and crawler. Truth is, it’s not 100% ours, we used Nutch. But I rather trust an open source software than a publicly traded firm’s API any day.
The point of the story is that between Mashable, Tech Crunch (all great sites, mind you) encouraging mashups, celebrating and glorifying this orgy of entrepreneurship with no safety net, they fail to properly relay that these are not businesses, but applications that are hobbies.
When MySpace comes out and blocks widgets, people are surprised. Are you crazy? Wake up and smell Rupert, it’s his space, not yours. He paid $580M for it, after all.
Folks, for the love of all things holy, get off the Web 2.0 nonsense and go start actual companies!
What’s really rewarding for me, personally, was a discussion I had in December 2005 with a successful VC right after I left my old company and made the decision to invest a substantial sum to develop our own index and crawler for MetaMojo.com. It was substantial for an individual, if Yahoo! and Google knew what we spend on it, they would be ashamed. Ask.com would literally be ran out of town.
Regardless, I was told by the VC: “keep using Yahoo!’s API, work on functionality.” It made no sense to me. We have not added bells and whistles because we want to grow the WatchMojo.com network (uniques, pageviews, searches, video streams) before adding some of the things we have added to MetaMojo.com… but the one thing that was imperative was NOT to rely on Yahoo!
That was obvious. Apparently, what is obvious to some is not to all. We’re back in a very dangerous time where we chuck any and all common sense pertaining to business fundamentals. Fundamental #1: it’s a business, and if you think another company will let you build something of considerable value on their backs with no repercussions, you are a tool.
Around the Web here, here, here and here.
Disclosure: I own shares of Yahoo!
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