The single “Stuck in the Middle With You” by Stealers Wheel (Joe Egan and Gerry Rafferty) sold over one million copies in 1972-1973. You probably recognize the song name and you can play the tune in your head, but I bet most of you never knew the band’s name or the individuals responsible for it.
Like this catchy song, the Internet is full of innovative sites and products created by entrepreneurs looking to get a million users, downloads or clicks. In fact, according to domaintools.com, approximately 125,000 domains are registered on a daily basis. Not sure about what percentage of those get used (there’s more than 125 million active vs. unknown no of parked domains), but many of the owners try their luck and spend money on hosting, design, development and maybe even a little bit of marketing. Aggregated, that’s a lot of money.
But how many sites do you use on a regular basis? If you’re the average Internet user, probably 10-15. More advanced users probably use up to 30 sites regularly. The top 100 web domains worldwide in January 2009 (according to a report from Comscore) shows that most of the leading sites in terms of unique monthly users break down into the following categories:
- owned by behemoth companies (Google, Yahoo, Microsoft, eBay, Apple, AOL, etc). These are mostly search engines, portals and ecommerce platforms (google.com, yahoo.com, bing.com, amazon.com, ebay.com, msn.com, aol.com etc)
- based in emerging markets: Russia, China, India. These are mostly search engines, portals and news sites (soso.com, baidu.com, 163.com, qq.com, sina.com.cn)
- porn related (getiton.com, xfuckbook.com, livejasmin.com)
- social networks (facebook.com, myspace.com – Twitter.com is at #34 and growing rapidly)
- hosting platforms (for images, files, blogs, videos – Facebook could fall in this category as well based on its popular image features but more traditional players are: youtube.com, blogger.com, wordpress.com, flickr.com)
- SEO driven massive content sites (wikipedia.com, about.com, cnet.com at #33)
See graph below.
How many new sites do you incorporate every day? How many sites do you only check out once through search, twitter or other social recommendation engines like Stumbleupon, Delicious, Digg, Reddit, etc. I know that in my case, the answer is only few (let’s say max 100).
Apologies for the long rant, but bear with me as I try to draw some conclusions.
- During the Gold Rush, only a few diggers made money. Most of the value was captured by the people selling tools and equipment. In this case, Google (adwords), hosting companies (Yahoo, Google, Go Daddy etc), development companies and design freelancers and so on. Only a fraction of the hundreds of thousands of sites launching every day will ever be profitable. A Register article shows how much money Google made in 2009 from typosquatting alone.
- There’s an opportunity in emerging markets. Most companies aim West, but the really currency on the Internet is unique users (a good post by Fred Wilson asks the question ‘how unique is a user’). Companies that gamble on creating a differentiated experience for those markets could potentially find themselves on this list next year.
- There is an opportunity in ‘related services’. Distribution is a real problem for newly launched sites. Where are the users going to come from? How will they know to find us on Google if they still don’t know we exist? By latching on to traffic hubs like Facebook, Apple, Google and Twitter and so on, it is possible for a new site to reduce the distribution risk. The most basic integration would be use their APIs and development platform to prevent multiple logins and get visibility from their users.
- First mover advantage is underestimated. If you were part of the first wave of apps to go on the Apple Appstore, you’d likely have hundreds of customer reviews and downloads to show for. Once a space gets crowded, it’s harder for the user to sift through the crap. Be alert to new platforms and announcements by large companies (the mobile world congress had a few of those) and try to anticipate the trend.
- Address a need – if you pay attention to the common themes across the top 30 web properties, you will notice that that they are high on utility (search, sharing, hosting) and most address a real user need. Once you identified the need – talk about it. Address the pain points of the user and go where the user goes to complain about it. Let them know you have the pill.
- Communicate, or better yet, let your users communicate. If you’re launching a new site as a first-time entrepreneur, chances are you’re a bit short on the budget side. In that case, word of mouth marketing is your friend. Create a message worth spreading and make it fun and easy for the users to spread it for you.
- Have a strategy – a strategy is not a vision. It’s a plan, a course of action that addresses the when and where and gives you focus. You are going to be the number one site for buying diapers online? Great! who are your customers? Where do you find them? What differentiated product, service or experience are you providing them? It’s easy to get distracted and pursue side opportunities, but the strategy will help you stay focused.
- Get cash flows coming. UVs are nice and good, but you can’t pay rent with that currency. You need to think not only about getting people through the door, but also about capturing the value. There’s a few proven business models on the net – don’t just rely on advertising because by definition, if you don’t have a massive audience to begin with, you’re revenues are bound to be LOW. A VC will value your company based on the money you are able to generate, so if you can afford it, start making money before approaching investors.
As you are thinking about launching a new Internet site, perhaps you’d like to keep these things in mind so you aren’t ‘stuck in the middle’ with the millions of sites that will not be remembered but will sound ‘familiar’ to people. On that note, if this is the first time you read this blog, welcome aboard and allow me to introduce myself. My name is Eze Vidra and VC Cafe is my ‘labor of love’. I am an experienced senior product manager specializing in search and am currently completing my Executive MBA at London Business School. There is more background info and links to my social network profiles on the about page of this blog.
It’s been a bit of an un-cut rant, but the real value is in the discussion, so please – if you have thoughts about this, leave a comment.