Techno-fille

Web 2.0 Eco-system

As we’re getting close to our next fundraising we thought it would be useful to get a clearer picture of how esnips was doing in comparison to other companies. Since traction is the initial and most central criteria in evaluating the potential of a Web 2.0 company, we started by organizing the top 100 web 2.0 companies by their reach.  This is the eco-system that came out.

Don’t take it too seriously of course, it’s a generalization, an interesting way of looking at things.  Problems to point out for example are that Alexa numbers are known to be skewed towards Bay Area traffic so some of the ventures reach is much higher than it should be, but those are the exceptions since the bigger the numbers get the less it becomes relevant.

Also, reach /  traction are far from being the only criteria defining the value of a company. And yet, it’s interesting to see that current investment, and the majority of acquisition, and rumored acquisition offers show a strong correlation between reach and market value as this eco-system suggests.   

As far as eSnips is concerned, we were surprised and delighted to see that we are part of only  a handful of companies that are showing signs for potential breakout. BTW, eSnips is now at 1200 in Alexa Reach . And, in case you were wondering....the answer is NO! we don’t rely on Alexa for our metrics. We follow our internal metrics :)

Credit:  eco-system was created by Daniel Waisberg, Analyst at eSnips.

Stowe Boyd wrote today about what's still missing in web 2.0 apps.  I like this topic because many would say that the space is already too crowded and that there are already a handful of applications in every area you look into. I agree with Stowe that there are other opportunities that have not yet been discovered, and not in small areas.

Two things strike me as food for thought:

•    Not many web 2.0 companies actually manage to get  beyond  the early adopters stage into mainstream use. Looking at Alexa, many of these companies show an initial growth (Stimulated by the launch and PR effects) and then the graph remains constant. I didn't do a significant research on this, it's a general observation that seems to be supported. Just a few days ago I came accross Reality check 2.0.

•     Apart from Myspace, Is there a Web 2.0 killer app / service in sight?  The first generation of the web created a few:  Portals (not a popular term but still here and still one of the two biggest players in the industry), web - based email, instant messaging and search.  How do I define a killer app? …..a service or application that everyone uses, an indication that it offers substantial value that can't be  ignored by the mainstream audience. I am not saying every service needs to be a killer app,  but  it has to deliver sound value to, or solve a real problem for, a mainstream audience.

So I agree  that there are still many opportunities out there for  important new services and new business models  to emerge . There are several areas that are still untapped (and I hope eSnips addresses one of them: content sharing ).   

For example, a huge gap  has appeared in between  Google (representing the web) and Microsoft (representing the desktop) and since the desktop is still the place where EVERY user manages their digital life, there should be many big opportunities in this space. 

When we created eSnips we looked at this gap, thinking specifically of content sharing, and analyzed  why some of the killer applications are so successful (IM,  VoIP phone services , or email, the original killer app). Here are some of the points that helped us in the brainstorming process:

•    They facilitate communication between people
•     Many of them reside on the desktop (yes…I know the desktop is not too popular these days but no one can argue that something that's on your desktop is always in front of you,  handy to use….
•    They  don't do a lot of different things,  they certainly don't fulfil a large number of different requirements,  but they do one important job well and simply.  On the other hand, 
•    They  tend to be generic, or perhaps the word is open-ended  –   they don't tell you for what purpose you should use  them, you use  them for anything  that seems relevant.  Many great products and services have emerged from looking at how people use current tools in ways their developers never thought of.

What we try to do in eSnips is take a very basic need - content-sharing - and make it as open-ended as possible. The downside of this approach, of course, is that unless the value of the application/service to the user is very clear,it may be more difficult to market.

Because web 2.0 applications / services are still at such an early stage, talks about web 3.0 and 4.0 may be premature. If we 're using the versions metaphor to describe where we are, I would say we are currently somewhere in the web 2.x phase. 

Pete Cashmore wrote about eSnips in Mashable.

Pete Cashmore wrote about eSnips in Mashable.  He referred to Mike Arrington's review of eSnips, but he had some reservations. 

Of course I 'm  very happy that Pete wrote about us,  but I disagree with some of the points he makes, not just as they relate to eSnips, but generally to the industry and to other services.
For those with  the  patience  to track the argument, I 'm writing here why I think broad services have more potential than specialized (though both are huge), and why mashups  aren't appropriate for everything.

Here are my points:

1. There is a market for specialized services AND a market for  sites  that provide a  wide range of services  (and yes, I agree that the case is often that each of these services may , taken separately,  be less professional than the ones offered by the specialized service).  Where I disagree with Pete is  the question of  which  one  has a broader market and user need. I belive that the specialized one has a smaller market, and the one providing a broader range of service  has a  far bigger  market .

As much as we don't want to admit it , convenience dominates our lives.  That is, for most of what I want to do, I'll prefer the most convenient service that requires the least hassle. People won't go the extra mile and inconvenience to go  to  the specialized place  unless they have an all-consuming hobby or specialization.  Examples: 

Take shops. You can go to a shop that specializes in running equipment, or you could go to a sports shop that may have less professional experience but provides you with a broader range of products so you will not have to go from one store to the other. A small percentage of us,  the  professional runners,  may never step into a  super sports shop, but for the rest of us, it's the most convenient way to shop when you find all the things you need in one place rather than  having to drive from one  store to the other. When you look for something that you know is specialized, you go to the specialized store.

Google is another good example.  There are tons of  specialized  search engines, that would get you better, more specific information but most people, including me, prefer to go to the  one  place where they would get most of what they want.

Third example is Myspace. A big appeal in  MySpace , and one of the reasons people left  Friendster and moved to Myspace, is the ability to share a broader range of things. dana boyd  in her fascinating essay 'Friendster  Lost  Steam.  Is MySpace just a fad?' points out that one of the reasons people left Friendster and moved to Myspace was that Myspace enabled them to share a much broader range of things:  Here's the quote:   

"The limited amount of things people could share made this difficult on Friendster; people mostly shared profiles as cultural currency and testimonials did allow for some marking of turf and social hierarchy. Yet, on MySpace, there are a bazillion things to find deep in the nooks, allowing lots and lots to be shared. Allowing media in comments and the ability to share video/pictures via profiles enhanced this. have one place."

2)  The context for everything that I worte above is ,  of course :  what is  the reason I go to a site. If I want to  be entertained, or if I filmed a totally funny video ,   then I would probably go to Youtube. But when I want to share stuff on an onging basis, I prefer the convenience of one  place , where everything is made convenient for me, and people come to me.

In this sense, you could say, well email is probably what eSnips competes against, and I think there's a point to address here too.

Regarding mashups,  don't misunderstand me, I'm all for mashups, but  they're sometimes appropriate and sometimes not.  Also, if you take it to the extreme you create companies that suddenly become back-end service providers to other companies and have no choice other than to charge for their services. If I  accept Pete's theory of how things should be, then the more services integrate Flickr, the less Flickr can create a community and value of  its  own . Taking this to the extreme, it will become a back end with high storage and bandwidth costs and no way to make a living other than to charge for its service.

The more you want to provide a consistent user experience the more you will use another company's API, and as you do that, you may even get to a point where this other company is totally transparent to the end user. For example, if you want to avoid asking your users to have an account in Flickr too, you use API's to create an account for them;   the more you do that ,  the more users become totally unaware of their existence.  Opening up APIs is something the giants can afford. Small companies doing that have to either rely on charging for being a backend or disappearing. 

I love these discussions, but I think  that eventually we're all surprised by the things that do end up working, and we 're all  much better at explaining in retrospect why some things worked and others didn't , than we are at predicting it in advance.  That's not to say that I don't participate in this sport.  Perhaps I'm totally over opinionated about it.

The social eSnips - the impact on our metrics

The social version of eSnips went live tonight. It’s fascinating to watch in real time what happens when a service that already has a substantial user base and traffic suddenly becomes social.  It's like a light turning on. One day it’s just your stuff and the people you share it with, the next day it’s suddenly all interconnected, and you discover other related content by other people, and  interesting people  who may have been there right next to you  all along , but you had no way of knowing.      We have our own data,  of course,  but even looking at Alexa, page views per visitor for example went up almost 300%,  overnight. Someone ought to do a case study on this phenomenon.

I’ll write more later about the launch, I just wanted to share this amazing experience. Don't forget to visit eSnippers' den for more news and updates.   

The new version of eSnips will launch on Tuesday the 21st

We’ve been working on this version for several months and can’t wait to finally launch it.

The first version of eSnips focused on providing our users with freedom, flexibility and control over WHAT they can share, WHO they share it with, and HOW they share it.

In the upcoming version eSnips will become social.

We made the first version available as soon as we could (Sept. 2005) with zero promotion and an almost non existing hosting infrastructure, and were astonished with the fast,  purely viral growth it received. That helped us tremendously raising a seed investment from a reputable VC, and allowed us to focus on the next version and to build a hosting infrastructure than can really scale.

We expect this change to have a major impact on eSnips' metrics. So if the current growth was good we are anxious to see what will happen now.   

Of course there is a downside to everything: This major upgrade requires a significant change in our database and significant downtime can’t be avoided. We’ll try to keep it to a minimum.

Check out Efrat's eSnippers den blog for detailed and more updated information about the launch.

Notes from IBDN's 'Under the radar' conference

We came all the way from Israel to SF, to attend the IBDN 'Under the radar' conference organized by Debbie Landa and Alison Murdock in. But it was worth it. We'll definitely attend the next relevant IBDN event. They did a great job at brining together to a relatively small event very  a impressive audience and panelists. The 32 companies that presented received useful comments to go back home with - no doubt.  Some of them, specifically  post Series A companies like Riya seemed like they no longer need to pay much attention to the comments they were getting…they'll probably be more attentive when they get closer to raising their next round.

It was great to chat with Renee Blodgett, Dave Winer, Stowe Boyd and Michael Arrington on things totally not related to Web 2.0.   Renee Blodgett or David Winer took this picture of me and Efrat listening to Michael Arrington interviewing Ross Levinsohn, President, Fox Interactive Media about their acquisition of MySpace.

The bright side of non-defensibility

Regarding Pete Cashmore's review of Edgeio and the comments on Edgeio's "defensibility". 

Shouldn't this term be RIPed? Aren’t there enough example that prove that it' s a NON-ISSUE. Isn't it clear yet that almost nothing in software is 'defensible'?  The big guys can always put together the required number of brains to develop anything. It 'll take a year or 18 months but they'll do it. Does that mean it will be successful ? Sometimes they'll succeed and sometimes not, and that's part of the risk you take when you do anything in life.  del.icio.us is a perfect example that Yahoo tried to reproduce with no success. When people create products that are their passion, it conveys somehow and it can be very hard to reproduce. 

We recently raised money from VCs, I'll write about it later, but before Web 2.0 services became so hot, the issue of 'defensibility' was a show stopper. Luckily for us – to build 'Non-defensible' products doesn't take too many people nor money. Otherwise we wouldn't have been doing what we do today.

For those happy few who've never tried to raise VC money: Defensibility refers to how difficult it will be for others to copy or compete against you.