I’m not going to call out any of the companies that presented at TC 50 or DEMO, but a lot of them didn’t seem to be companies at all. In fact, a lot of them were just applications or features. I suppose this is what Ms. Estrin is talking about in her new book, “Closing the Innovation Gap.” Now I’m not saying that some of these features or applications weren’t cool little things to play around with, but for these guys to go for funding and call themselves companies, just doesn’t seem right to me.
A lot of what I have seen revolves around creating new communities in different areas, for example a birdwatching community, a community for the recently deceased (don’t ask), etc. When asked about how they make money, many of the companies on stage stammered and said they weren’t sure yet but they are looking into it. Is that an answer? When I think of a business or a company I think of a self sufficient entity that is generating some sort of income.
What’s even more interesting is that Jason and Arrington selected these companies and it really made me wonder why? I’m not trying to question anyone’s judgement (yes I am) but when I see a company that wins the TC 50 that is an exact copy of twitter but with “groups,” it makes me wonder. Why did those 52 companies get selected and why did that “one” company win?
This bring me to the main point of this post which is do you need to actually be a company to go for funding? It seems to me that we aren’t funding companies anymore we are funding features and applications. We are funding bells and whistles in the hopes that they will one day actually become a part of a company. I don’t want to say that all of the companies at TC 50 or DEMO were garbage because they weren’t, in fact there were some amazing technologies presented (like Swype).
What’s your overall impression with what we are funding? Are you seeing more applications and features as opposed to actual sustainable businessess?
You call Yammer “twitter with groups”, TC called it “Twitter with a business model”. I don't see anything wrong with developing complementary services like this. Not every business has to be a standalone entity.
I totally agree. It seems that many people are trying to get funding, just so they can be bought by (insert industry leader). Its not that they can pro-actively make money themselves, but they could enhance a current product in the marketplace, or add another audience, but their product/service is designed specifically for something already out there.
That is not to say that there aren't people out there doing something new, or that have their own real product/service… there just happen to be a lot of “Enhancement-Companies.” Is that a bad thing though? In some industries your enhancement or feature is a product that can get added on to multiple companies products to help make a better finished part. For example, in the machining industry you can have your part heat-treated, hardened, formed, plated, etc… all of which the supplier may not be able to do in-house.
The difference, I think, is that most of the “enhancements” for the machining industry are sold as services out to multiple part suppliers (thus making money on their own). In the Tech industry though, especially the online/social space, the service being provided is either targeted directly for one company, or it is not sold out to multiple companies, but bought by one company to keep everyone else from having that specific product/service.
hi daniel thanks for the comment. twitter with a business model is also a good way to describe. the only problem with both descriptions is that we have to use an existing business to describe it. the fact that we use “twitter” to describe yammer should signify that nothing new is going on here. Perhaps this more of a “twitter missed the boat” opinion, but yammer is nothing new and nothing special. twitter should have done this
thanks for the comment daniel!
hey jacob 🙂
i think “enhancement companies” is a great way to describe them. Great analogy with the machine industry, but as you point out they are sold as a service. there were some great new things out there though, just not sure how many of them are actual “companies or businesses.”
thanks for commenting and reading jacob, hope to read more from you!
I have to agree with you here because I've often wondered this myself. There are definitely ways to center your business around an application – 37signals is an excellent example. They generate income though and they also contribute to the industry in a positive way (their blog, conferences, Getting Real, etc.).
But some of these dime-a-dozen startups coming out of TechCrunch and such…not so sure they're a sustainable business.
hi tim, i think 37 signals is a good example as you have mentioned. its hard to clump them all into one group but i think a lot of people are starting to notice that these startups are starting to turn into weeds! the market is getting more and more saturated and i just wonder if it is sustainable at it's current rate, guess we will find out.
thanks for reading and commenting tim, always good to hear from you
You call Yammer “twitter with groups”, TC called it “Twitter with a business model”. I don't see anything wrong with developing complementary services like this. Not every business has to be a standalone entity.
I totally agree. It seems that many people are trying to get funding, just so they can be bought by (insert industry leader). Its not that they can pro-actively make money themselves, but they could enhance a current product in the marketplace, or add another audience, but their product/service is designed specifically for something already out there.
That is not to say that there aren't people out there doing something new, or that have their own real product/service… there just happen to be a lot of “Enhancement-Companies.” Is that a bad thing though? In some industries your enhancement or feature is a product that can get added on to multiple companies products to help make a better finished part. For example, in the machining industry you can have your part heat-treated, hardened, formed, plated, etc… all of which the supplier may not be able to do in-house.
The difference, I think, is that most of the “enhancements” for the machining industry are sold as services out to multiple part suppliers (thus making money on their own). In the Tech industry though, especially the online/social space, the service being provided is either targeted directly for one company, or it is not sold out to multiple companies, but bought by one company to keep everyone else from having that specific product/service.
hi daniel thanks for the comment. twitter with a business model is also a good way to describe. the only problem with both descriptions is that we have to use an existing business to describe it. the fact that we use “twitter” to describe yammer should signify that nothing new is going on here. Perhaps this more of a “twitter missed the boat” opinion, but yammer is nothing new and nothing special. twitter should have done this
thanks for the comment daniel!
hey jacob 🙂
i think “enhancement companies” is a great way to describe them. Great analogy with the machine industry, but as you point out they are sold as a service. there were some great new things out there though, just not sure how many of them are actual “companies or businesses.”
thanks for commenting and reading jacob, hope to read more from you!
I have to agree with you here because I've often wondered this myself. There are definitely ways to center your business around an application – 37signals is an excellent example. They generate income though and they also contribute to the industry in a positive way (their blog, conferences, Getting Real, etc.).
But some of these dime-a-dozen startups coming out of TechCrunch and such…not so sure they're a sustainable business.
hi tim, i think 37 signals is a good example as you have mentioned. its hard to clump them all into one group but i think a lot of people are starting to notice that these startups are starting to turn into weeds! the market is getting more and more saturated and i just wonder if it is sustainable at it's current rate, guess we will find out.
thanks for reading and commenting tim, always good to hear from you