By Toby Somerville

For Sale: Web Application – Unused

By Toby Somerville

It seems to me that web applications market is heading for its very own dot com-esque bust. The basic ingredients are all there, VCs investing huge amounts of money in start ups. A general air of: if you build it, they will come. Then (of course) Google, Yahoo! or Microsoft will buy it. Underlying all the hype there seems to be an increasing number of start-ups going to the wall. Why? A few of the reasons (IMO) are:

  • they are incredibly niche
  • they are frivolous and of little practical use
  • their revenue models are fundamental flawed

New web apps are launching because VCs are throwing money at new startups in the hope that they will get in on the ground floor of the next Facebook or YouTube, and therefore, be part of the next billion dollar sale. A lot of these startups seem to be missing the most basic business principle of — making money! I’m all for startups, but if you are going into business it should be about building a product that can stand on its own two feet without being bought out by one of the big three.

A lot of the current wave of web apps are just time wasters – they don’t do anything useful (IMO). And have a severely limited market (some would say niche). The young, hip and self-obsessed can update their every waking moment on Twitter but, is the wider world going to be flocking to it? I doubt it. Can you see your Gran using Twitter? (Making a lovely cup of tea before the WWF smackdown finals).

And what is with all the ridiculous names? Honestly, have they forgotten the golden rules of domain names:

  1. make it memorable
  2. make it spell-able
  3. keep it short

Most get full marks for number three. But, otherwise it is i-this, or missing letters that, or too many vowels the other. Then there are the completely mis-spelt or the made up word brigade.
I admit, it is difficult to get get a domain name that covers the three rules especially with all the three letter, four letter and dictionary word .com domain names already registered. So there is a need to be a bit clever about it, but the whole web 2.0 naming thing has gone awry somewhere along the track. Just because you have a name mis-spelt like Flickr does not mean your offering is as good or worthwhile as Flickr. Is del.icio.us popular because of the clever use of domain name hacking — No. Is domain name hacking a good idea? That is debatable.

Of course not all web app start up have weird names and no discernible revenue streams. There are some great web apps out there with great name – RememberTheMilk.com and Backpack to name two.

One of the great things about the Internet is, that it has incredibly low barriers to entry. If you have the time, skills and resources you can create and market a web application. This ease of entry also has a flip side –- speed of exit. Competition is savage on the net,the competition can quickly adapt and challenge your market. It is not like the car industry where it takes billions in research and development, and years of work to produce a new model. New web apps can be built in days, sometimes hours. Never forget Internet users are an unforgiving bunch – if they don’t like it or don’t see the point, then there are billions of other pages to explore at the click of a mouse button. If you can’t explain clearly, in one sentence, what your web application actual is/does – then chances are no one is going to hang around long enough to find out.

If you are looking to create the next big thing – make sure it fulfills a need and/or solves a problem and have a better money making plan than Google buying it for a billion. TTFN.

  • Making a lovely cup of tea before the WWF smackdown finals

    I had to laugh out loud at that! I think if just one grandmother can make such an announcement then twitter will have all been worthwhile!

    And yes, many web apps seem to specific in their purpose to make profit in their own right. If I were CEO of an internet giant I wouldn’t be looking to plonk a heap of cash on a popular but non-selling app… but them I am the conservative type.

  • Jon

    I agree with your points about apps being too niche, and having stupid names, but I think the issue of having a viable business model is a little more complicated. The very reason that start-ups can’t try and monetize immediately is the savage competition and unforgiving users you talked about. Any site that charges money or uses adverts, is liable to be overtaken by someone who clones their app but does it for free or without adverts.

    Take your example of YouTube. As I see it, they had no business plan except to make a video site that everybody used (using investor’s money), then get bought out by someone with deep enough pockets to pay their bandwidth bills and fight their legal battles. Now imagine if they’d taken a safer, more profit oriented approach, by placing ads on the site and in the videos, moderating all new content for copyright infringement, charging for certain features, etc. Would they have seen the growth and success that they did? Of course not, they’d be a bit-player and some other site, with a less restrictive model would have overtaken them.

  • DevonTT

    Great points all around. To build on your point about available domain names, I’d just add that businesses ought to be more concerned about their brand than their URL. Now that most people are using search engines to navigate the Web–as opposed to direct URL input–having the perfect .com name is much less important and shouldn’t be the factor that drives the brand name.

    RememberTheMilk.com is a great example of filling a consumer need and naming the service–not just the URL–around its key benefit. It probably took some work and creativity to find an available domain name, but it really paid off.

  • delicious does my head in – I can never remember where the dots go, which is why I’ve never used it.

  • Anonymous

  • deltawing1

    I agree that the names are a bit ridiculous. One of the reasons for creating the silly names was because of search engine optimization (or so I heard). You make your name weird so you don’t need to compete with other websites containing the same keyword.

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