Friday, October 14, 2005

Can Web 2.0 mashups be startups?

Dare Obasanjo from MSN posted some interesting comments from a panel at Web 2.0 that included Paul Rademacher, the author of the cool Housing Maps mashup that combines housing listings from Craigslist with Google Maps.

When Paul was asked why he didn't try to make Housing Maps a startup, he apparently gave two reasons he decided not to:
  1. He did not own the data that was powering the application.
  2. The barrier to entry for such an application was low since there was no unique intellectual property or user interface design to his application.
It's a great point. Mashups are simple combinations of other people's web services. They're often done in a flash of inspiration in a weekend of hard coding.

The ideas are often clever and useful but, once someone has demonstrated a mashup idea, there is little to stop others from duplicating it. If there is no novel technology and no proprietary data, there are no barriers to entry. The software is merely an intermediary connecting two other pieces of software. There is minimal value add; most of the value lies in the underlying services.

Mashups by themselves cannot be a startup. While startups can leverage existing web services to avoid recreating the wheel, there has to be something else, some additional data, some additional software, some novel technology, in the service for it to be a business.

Update: Five months later, alarm:clock reports that VCs are "dissing mashups .... because they are not readily defensible."


Dustin Luther said...

Interestingly, Paul gave me the same two arguments for not wanting to build a home search mashup based on MLS data when I talked with him at the Where2.0 conference last June. As the entry of and Trulia (among many other mls search engines with mapping), he was quite prophetic when he told me that there would soon be a lot of competition in this real estate mapping market due to the low barriers to entry.

Composing said...

I think you're sort of right - in the literal sense. But may be missing the bigger picture.

A lot of web-services are built on (and dependent on) somebody else's web thing. Search engines are a classic example : "how could THAT work? How can Google trust that people won't delete or change the contents of their pages that Google went to so much trouble to index? Isn't the value in the pages themselves, not something as ephemeral as links?"

In the real economy, an awful lot of people act as brokers or middle-men between two sources of value, and they DO (apparently) add yet more.

Mashups certainly add value that doesn't exist in either of the original sites. The only question is a) whether there's a business model, and b) whether the mashup is unethically parasitic.

A lot of mashups have no business model and are done for fun. But that doesn't mean that there can't be something mashup-like that became a huge business.