Archive for the ‘markets’ Category

En’listing’ VC

Tuesday, October 24th, 2006

Today, Edgeio announced a $5 million Series A round of financing headed by Intel Capital. Subsequent investments came from Transcosmos Investments and Business Edgeio logoDevelopments Inc. The basic premise behind the company is to aggregate classified listing from around the web and bring them together on a single site. Edgeio launched in March of this year amid a huge amount of hype and anticipation (as it was co-founded by famous TechCrunch blogger Michael Arrington) - only to receive a mild/lackluster welcome to say the least. But since then it has really started to gain momentum and recent developments look promising for the company.

When the company launched, their highly touted blog listing feature flopped. So recently, they’ve been downplaying this feature. Essentially, it allowed you to post listings from within your blog by tagging your post(s) with the term ‘listing’. You could also tag the post with other terms to further increase results. Nonetheless, Edgeio is now more focused on the aggregation strategy itself.

With companies like eBay, Cafepress, and Amazon now onboard, the company looks well-positioned to take the lead in the category moving forward. Add to that the fact that they just launched a Chinese version of the site ( and filed several patents pertaining to distributed marketplaces, and I think the company is taking the right steps to succeed.

As for the future of Edgeio, I see huge potential for a site like this. It reminds me of other aggregation and comparison business models including shopping (i.e. Froogle, Shopzilla, Pricegrabber) and travel (i.e. Travelocity, Orbitz, Kayak). There is obviously a strong business model at hand - now strong execution and implementation is necessary. Moving beyond the web 2.0 fluff to a sustainable business model will be the real challenge, but I’m confident Edgeio has what it takes.

Web 2.0 Winners: Part 1

Wednesday, October 11th, 2006

How do you define a winner in the world of web 2.0? By revenues? Traffic? The good it has provided to the world? To be honest and from a personal standpoint, I’m going to have to go with the third one on the list. My view of web 2.0 is an Internet where Craigslist logoprocesses are simplified, user-generated content and participation fuels the surge, and the web’s information is more accessible and useful. That is web 2.0 to me. So for part 1 of this blog post series, I’m am going to outline a company that has re-organized a vast amount of information, made it much easier to navigate, and ALL at no cost to the user. Who am I talking about? None other than Craigslist.

Why do I like Craigslist so much?

  • FREE service
  • No flashy ads or full-blown images
  • Clean interface lay-out
  • Fast page load speeds
  • Extremely simple navigation and hierarchy
  • Brilliant posting system

The list goes on and on - I know for a fact I haven’t covered all the robust features.

Craigslist has essentially taken the historical newspaper classified system to a whole new level on the Internet. Not only is it free, but it is so easy to use and find exactly what you are looking for. Why would anyone want to use the newspaper anymore? The breadth and reach of the web is worldwide, whereas the distribution of a newspaper is much less vast. Once again, another web service benefits from the network effect - the more people that use Craigslist, the more powerful, useful, and valuable it becomes. And the cycle continues as such.

This true success story is made even more powerful by its mission of service and non-corporate culture. Though Craigslist is a for-profit entity, the company does very little to drive revenues and focuses mainly on the user experience. This is the reason you see no ads - ever. The company supports its operations by charging business below-market rates for help wanted ads in San Francisco, New York City and Los Angeles, as well as for broker apartment listings in New York City. Amazing. Click here to see just how effective and inexpensive those ads are.

Craigslist is definitely a web 2.0 winner and has shown the world what a little philanthropic project can turn into with a little luck. Thanks for everything Craig Newmark. You’re a brilliant man and you’ve made the world a better (and more useful) place to live.

UserSubmitter - I Don’t Digg it

Tuesday, October 3rd, 2006

Just when you thought the web was corrupt enough (see previous post on PayPerPost), another evil company pops up with bad intentions. In this case, I am talking about UserSubmitter. I first read about this company on Read/Write Web and Richard MacManus strongly disagrees with their practices as well. I like his use of words to describe the company - ‘pond scum’. Very fitting.

The premise of UserSubmitter is the following: the company pays Digg users $0.50 for Digg logoevery 5 stories they digg. From the opposite side of the spectrum, companies or individuals can pay $20 per story, plus $1 per digg. In other words, UserSubmitter is creating a monetary Digg marketplace system. This not only skews Digg’s results, but also jeopardizes the entire premise of the service.

Why are people doing this? Obviously money is the motivation, but at what point do morals and ethics come into play? Scoundrels like the guys behind UserSubmitter need to take a look in the mirror and realize what they are doing. Once again, I hate to sounds cynical, but I see the Internet as an avenue for growth and opportunity, not neglect and misrepresentation. But as is the case with any social system, it will be exploited and there will always be those who are looking to make the quick, easy buck.

The Network Effect: Part 2

Sunday, October 1st, 2006

Let’s look at another great example of the ‘network effect’ (click here for part 1). AsIM logos previously mentioned, with every user you add to your userbase, your network becomes more valuable and relevant to all. So let’s take a look at instant messenger clients (i.e. MSN Messenger, AIM, Yahoo Chat, Google Talk). To facilitate this process, let’s create fictitious characters and a conversation dialogue.

Tim: “What IM client do you use, John?” 

John: “I use MSN Messenger. I have about 100 contacts.”

Tim: “Have you seen the new Google Talk. It’s great. Full of new features and functionality.”

John: “That’s great, but I’ll stick with MSN.”

Tim: “Why is that?”

John: “Well all my contacts currently use MSN. If I were to switch, they would all have to switch as well to make it worth my while. This would be next to impossible, as all their contacts would have to switch as well - and the cycle continues onward. All I’m really interested in is a tool that will allow me to chat with them. Added features and functionality are great, but they’re not my main focus, nor will they tempt me to switch.”

Tim: “Fair enough. Makes sense I guess.”

This example showcases the power of the network. With every added user, the network becomes more valuable. In addition to IM clients, social networks are also a great example of this phenomenon. If all your friends and/or family are using Friendster, for example, why would you want to use hi5? It wouldn’t make sense and wouldn’t provide any value to you. There are huge barriers to entry for the product to become valuable to you.

Once again, do not underestimate the power of this effect. Next time we’ll look at how the network effect may lead to a monopoly. And what better example than this ‘little’ operating system company you may have heard of… 

Crowdsourcing? Say what?

Saturday, September 30th, 2006

I was in the midst of a discussion with a tech friend of mine the other day, when I nonchalantly mentioned the term ‘crowdsourcing’. I just assumed that he knew what it meant, but he had no idea. Upon further inspection, the term is more recent than I realized. Many may already know what it means, but here is a short lesson for the rest of you.

Everyone’s favourite online encyclopedia, Wikipedia, defines crowdsourcing as “a business model akin to outsourcing, but relying upon unpaid or low-paid amateurs who use their Wired logospare time to create content, solve problems, or even do corporate R&D”. The term was coined in June 2006 by Wired magazine writer Jeff Howe and editor Mark Robinson.

Examples of this phenomenon include LinuxWikipedia, and Firefox. All three products were created by unpaid (in most cases) individuals who volunteered their time and services. As you may very well notice, open source in general is a form of crowdsourcing that has existed for the years. The actual notion and term have only become more mainstream in recent times.

Cambrian House is a recent start-up out of Calgary, Alberta that has gained much press attention as its entire business model is based off of the idea of crowdsourcing. They combine crowdsourcing with Internet marketing to provide instantaneous access to consumer demand. And because of their unique business model, they pledge to be the first billion person company. Ambitious to say the least, but inspiring. Good luck kids.

Wow, this crowdsourcing stuff is cool. Sounds almost as fun as crowd-surfing.