We continue to see many companies, Fortune 1000 to startups alike, embracing “Web 2.0″ technologies. These span technologies that include social networking, user generated content, and creative forms of crowd sourcing as a form of publishing. Recently we’ve seen companies which are part of the infrastructure of the United States begin to offer “Web 2.0″ technologies presumably as a way to service customers. These companies include Waste Management, Chevron, and Proctor & Gamble to name a few.
What’s scares me is that these companies that embody America’s infrastructure are embracing technologies which have yet to prove that they can deliver any intrinsic value. As an example, Facebook has been “valued” at $15 billion dollars based on an investment made by Microsoft that has no fundamental qualifications. Outside of a few misguided acquisitions, i’ve yet to see a “Web 2.0″ company that created value.
If you have any doubts, name one “Web 2.0″ which created shareholder value based on free cash flow, excluding any acquisitions.
Any answers? …didn’t think so.
There has been substantial and increasing chatter in the tech blogosphere about location based services as we continue to see more groundbreaking functionality on mobile phones. What is interesting is no one seems to know what “location based services” are or how they will be monetized – the assertion is simply that these services will usher in a new era of mobile applications and services. What is concerning is the substantial and growing startups which receive venture funding for map based communication services.
Admittedly, I’m probably not in the target demographic of these map based communication services, however I see no value creation in the ability for me:
a. to see where my friends are on a map, and to chat within the map context
b. what my friends (or others) think of businesses identified on a map using push pins
c. to chat with people I don’t know who are in my vacinity according to a map
The common problem in these sorts of “location based services” is obvious, in each case the user has traveled to a given location. The decision that user faces is one of what destination to choose, and what are the decision criteria for selecting the destination. According to the emerging “location based services”, I can ask my friends, ask a stranger, or look at recommendations of friends and/or strangers. These “location based services” do not account for the user’s behavioral preferences, nor do they account for the user’s choices independent of other users of the “location based services”. In this case, the location is being used as the value proposition when there is no value offered as it pertains to the decision criteria required to select a destination in that location. The decision criteria is constrained by location, and not the other way around. So ask yourself, why are investors pouring money into these companies where “location” is the product?
Today, many internet startups create new names to describe the products and services offered by their businesses. They create new names due to the fact that there is a scarcity of good domain names that are available. This, however, is incorrect. There are many good domain names available, but most require a price as they’re owned by someone or some entity that invests in domain names. Many describe these investors as “domain squatters”, which is a misnomer since domain investors are no different than real estate investors. Typically, those who throw out the term “domain squatters” are simply bitter since they lacked the foresight to secure the domain rights that would be ideal for their current business idea.
Great domain names, even the coveted one word domain names, are available for a price. Unfortunately, many entrepreneurs today choose to “make up” a new brand name, often a word which comes from the english language minus a few vowels. What’s interesting is that many entrepreneurs choose this path as they feel paying a so called “domain squatter” is ridiculous, even if the domain name naturally represents their product or service. Instead, they create a new brand name, work to secure venture capital, then spend millions branding their new brand name.
Now ask yourself this question, say someone is selling widgets.com for $10,000. An entrepreneur and his/her team has developed a disruptive new widget which has resulted in the team securing $3 million dollars (for example), and they’ve named their new company wdgts.com. Typically, the newly funded company will spend thousands (if not millions) marketing wdgts.com. Now wouldn’t it have been more practical, cost efficient, and much more intelligent to purchase widgets.com which would have risen organically to the top of search results on all of the search engines? This would substantially lower search marketing costs for potential customers searching for widgets, while enabling the new company to get better use of its’ $3 million dollars in funding. Doesn’t this make more sense?
Search engine optimization should be the starting point for all entrepreneurs seeking to build a viable business. For every one google.com or yahoo.com, there are thousands of mowsers, edgeios, meevees, boos, floozes, and zozas. There are great keyword domains available for purchase, ones that expire each day, and those that have never been registered. Granted, the one word keywords will likely have to be purchased, but there are many GREAT two letter keywords which drive strong traffic organically. Smart entrepreneurs should roll up their sleeves and find these gems. This is a better solution than taking an investor’s money and blowing it on wdgts.com.
- Brand Marketing
- Internet Marketing
- Product Design
- Venture Capital
- Web 2.0: Stupid is as Stupid Does
- Location Isn’t A Product, Location Is A Constraint
- CBS buys CNET for $1.8 Billion
- Costly Brand Marketing
- Mobile content isn’t new, “mobile internet media” is new.