The alarm bells are ringing in the web world (see the Techmeme discussion) – one of the gorillas in the space is flexing its muscle and protecting its turf as MySpace is preventing Photobucket photos and videos from appearing on its site. As Om Malik mentions, this happened once before and I am sure the MySpace folks have done some hard thinking about whether or not their users will vote with their feet and leave, and if they do, what kind of impact it will have on its business. I guess they figure it won’t be too large of an impact for them. Anyway, all of this is not a surprise as this is the way business works. Forget about Web 2.0, this is Business 2.0 (ok, someone else already has the trademark). The world of openness is only open so much because if you get to0 big and threaten someone’s turf and livelihood, guess what…they will fight back. I put a timely post up two days ago titled "Why Startups Must Control Their Own Destiny." The point is that the only person you can really rely on is yourself and in this world of mashups, widgets, and open APIs, distribution is easy…getting money is hard. Well guess what-distribution via widgets on MySpace was relatively frictionless, but now that Photobucket is a serious player, the Gorilla is fighting back and that is just the way the world works. I am not saying that you should not leverage free distribution, but that you should prepare yourself for the day that it may disappear. In one of my portfolio companies we have a saying, "Google giveth and Google taketh away." The point is you should take a hard look at your business, and if you are too dependent on any one partner or distribution method, you should stay awake every night thinking about how to diversify your business. And for those who built their business off of one partner and think they are worth hundreds of millions or billions of dollars, I can assure you that if that one partner is not buying you, there will be appropriate discounts paid to your business based on the fact that the acquiring company’s competitor could shut your lifeline off tomorrow. Yeah, this is nasty stuff, but this is business and companies need to make money.
Published by Ed Sim
founder boldstart ventures, over 20 years experience seeding and leading first rounds in enterprise startups, @boldstartvc, Saas 2.0, googlization of IT, security, smart data; cherish family time + enjoy lacrosse + hockeyView all posts by Ed Sim →