No Competition? No Market / 04.11.08
When I wrote Business Relationships and Enemies I briefly discussed Grand Effect and called them a competitor to 9rules. David Peralty, one of the founders, didn’t necessarily agree with me and I can understand why. He is a nice guy, the type who doesn’t like confrontations so having someone call you an “enemy” can’t be a good thing. Then he wrote something that really caught my eye.
I never saw Grand Effect as competition to any other network out there…
This drew my attention because I remembered a saying by Netscape founder Marc Anderssen.
I’ll assert that market is the most important factor in a startup’s success or failure.
Now going back to what David says, he is in a market with no competition (according to him) and I thought that couldn’t be a very good thing. Usually the markets with zero competition are the ones that nobody wishes to be in. 9rules has been in that position before. We always figured we kicked so much ass that nobody wanted to compete with us, but the reality of it was if when you are just running an independent blog network, there is no money involved (well not enough to make you a millionaire contrary to popular belief).
The market was lacking.
Now if we ever decide to create an ad network based around 9rules then you will see a ton of competition because that places us squarely in the ad network market. As it stands now we aren’t looking to make 9rules a competitive entity but a complement to other sites we will be pushing out (I’ll go more into this in the future so it makes sense). 9rules becomes a tool in the larger scheme of things to help our company grow. Because of this we don’t need a great market because 9rules is the market for independent blog networks that don’t force many things on their members or try to get ad revenue. Yeah, that is just one market. I hear AOL is gunning for us.
How many competitors to Twitter are there? Pownce, which has a revenue model, and Jaiku. Doesn’t it surprise you that with the success of Twitter there aren’t a million clones out there? Isn’t that how web 2.0 works essentially? Well there probably would be more if people saw that Twitter was making any money. You always have to question a market with no competition.
Before Twitter even started you had to think what market Twitter felt a need to enter. I suppose we could consider their competition IRC, IM and email so that means they were aiming for the market that isn’t satisfied with those utilities. That is a tough market. Because of this you can see why Twitter has gained such traction and also why it will be difficult to break into the mainstream.
There is always going to be some sort of competition though in your market. With Grand Effect I consider them the competition because the resource is independent sites. There are only so many great ones on the web so resources to make your network successful are limited. If Grand Effect were to take all of our members then we suffer, does that not make for competition?
For a while The Triad thought that b5media were making a move into our market (that huge one I talked about earlier) by offering sites hosting, but in reality they were playing for the ad networks (of course I could be an idiot and be wrong as usual). I’m sure someone from there will correct me if I’m wrong here, but I believe if they hosted your site they also offered to sell advertising and have it become part of their blog network. That is a FM Publishing type of play and we all know the ad market is very strong so competition is deep. With their network bar going across all of their sites, Grand Effect would be wise to play the ad network game and I believe they are and that puts them into competition with FM and b5 (assuming b5 does what I think they do) whether they want the competition or not.
Now this isn’t to say you should enter a diluted market, but you shouldn’t enter a market with no competition (if those exists). You want a strong market or create a market that will be strong. Don’t pretend that it is a good thing to have no competition. Name one major company that has no competition. Go for it. When you find one, go work for them because you will be set.
2 Responses
Jeremy Wright // April 12th, 2008
Well when you link to us we see it, so I’m happy to respond :)
Basically, early on the b5 play was 3 parts: launch our own blogs (90% of the network), welcome in large external blogs (5% of the network) and rep even larger blogs for ads (the FM side of things, which accounted for 5% of the network).
Now it’s more like 92/3/5 in terms of number of sites.
The best comparison is really more to the magazine publishing world - just without all the paper :-)
Paul Scrivens // April 13th, 2008
So you would say your market is more the Weblogs, Inc and other such controlled/monitored blogging networks. Thanks for the clarification Jeremy.