PowerReviews vs. BazaarVoice
I had a chance to sit down with my friends Robert Chea and Andy Chen, the two original founders of Fogdog, now onto their next adventure, called PowerReviews. PowerReviews provides retailers a turnkey solution for managing consumer product reviews, it’s tagged based and requires almost no work from IT to get up and running. They compete with BazaarVoice, founded by Brett Hurt, who left Coremetrics last year (he was one of the three founders there).
From what I can tell it’s a close tie as far as technology, quality of services, IP, even funding (though PowerReviews has 50% more capital than BazaarVoice, $6.2M vs $4M) - but the market approach is radically different. If you want to see Web 2.0 collide with Web 1.0 - then read this:
- BazaarVoice charges a few thousand dollars/month. I suspect ASP to be ~$40-50K/year based on conversations I’ve had with my former Fireclick clients
- PowerReviews is FREE
- BazaarVoice is positioned at the top of the pyramid serving reputable retailers (CompUSA, Petco.com, etc)
- PowerReviews’ targets the long tail - so to speak (they actually have top retail properties signed up)
And now the real kicker… PowerReviews aggregates all the product reviews it’s getting from the “long tail” retail sites, and features these back to consumers through powerreviews.com, to be launched later this year. Andy and Rob want PowerReviews.com to be the reference site for product reviews - and monetize the traffic through CPC programs similar to PriceGrabber or Shopping.com. WOW.
I was commenting the other day on how different it is to start a business like Perenety in 2006 compared to my experience with Fireclick in 1998. Here’s another incarnation of that fact. Andy and Rob could have decided to charge for PowerReviews and compete with BazaarVoice with traditional, entreprise software rules. After all, this is a new market and there are plenty of customers out there for both companies to thrive. Not to mention PowerReviews has the tech, the talent, the experience and the backing (obviously). Rather, Andy and Rob decided to disrupt a business that doesn’t even exist yet.
Still, I think we’re up for an interesting battle since this market it too new to call for a winner yet.
The strongest possible foundation
For years I’ve been evangelizing Web analytics to retailers, content sites, and even software companies (I founded a Web analytics company called Fireclick, acquired by Digital River in 2004). And even though more and more people now understand the value of Web analytics - there are lots of online businesses out there that consider Web analytics to be a second priority.
Interestingly enough, I too had my “why do I need Web analytics now” a few weeks ago, for Perenety. Consider all the issues related to the formation of a startup - product, technology, funding, marketing, etc. It’s not too hard to understand why Web analytics is a second priority for some, at least for the first 2 or 3 years of operation. Being a pragmatic kind of guy, I wasn’t going to sink hours into Web analytics “just because” - and I needed a strong case for having Web analytics on my radar. And truth be told, being in the consumer software business, we don’t need sophisticated analytics because we only have one product we’re going to market with 5 or 6 pages on our site, max. On the other side, our marketing budget is essentially zip so we have to be very focused, and make sure these 5 or 6 pages are fully optimized.
Do we need or not need analytics. I do not have the final tactical answer yet. i.e., are we going to be looking at these reports and making decisions everyday. Not sure. But I have a strategic answer. We are building a product that will be used by millions of people, 98% of them living “East of the Silicon Valley hills”. It’s critically important for us to reach out to our users in Arkansas, New York or Italy, and find out what’s in their minds - because THEY are the customers. Not our employees, not our VCs, not our family and friends. And for that, we need need to test different marketing messages, measure their impact, and adapt - almost in real-time.
So, Web analytics? Absolutely. Integral part of our company culture, and the strongest of foundations.
Startup 2.0
Starting a new business is a lot easier now than back in 1998, when I started Fireclick. Set aside the fact that I have more experience, the cost of doing business is nowhere near what it used to be. A few examples:
- Phone and internet: today you can really good office connectivity for $75/mo, with VoIP limiting your bills to $50-70/mo for a 6-8 people office (we use Asterisk, the open source PBX for phone switching).
- Office rent: costs are about 40% of 1998-2000’s (Silicon Valley)
- Marketing costs: this won’t be of any surprise to anyone, but all the pay-for performance marketing programs, getting in front of your prospects is more a science than an art.
- Outsourcing: there are now lots of options for Web site development, specific engineering projects, QA, Operations. Non-mission critical tasks are easy to outsource for cheap.
Clearly there are exceptions (medical insurance costs, local Silicon-valley wages, etc), but overall, things have changed, big time. Entrepreneurs are the big winners here, since they need less capital to get off the ground.
Bye Fireclick, Hello Perenety
Some news - after more than 7 years at Fireclick, I am going to hit the entrepreneurs’ trail again with an exciting new startup called Perenety.
I want to thank every Fireclick employee, customer, partner, supporter - past and present - for helping create a great and healthy business with a bright future. I want to thank our investors for keeping their faith in us, and helping us weather the 2001 recession. I want to thank our competition for keeping us honest, forcing us to innovate, and by and large, for their fairplay with regards to Fireclick. My best Fireclick memories all revolve around extraordinary people that I’ve met, and certainly hope to work with them again on new and exciting technologies.
Talking about new and exciting technologies, I’m inviting you all to sign up for the Perenety alpha, and, as we soft-launch, give us as much feedback as possible along the way. I promise to be sharing my entrepreneurial experiences, including my analytical experiments, with the readers of this blog.
Are you ready? Let’s go!
Learning from the top bloggers
Bloglines users have access to a list of public subscribers for every blog they subscribe to. That’s what I’ve used to try to validate the theory I explained in my Bloggers’ Theory post. Just for fun.
If click on the “subscribers” link, you get a list of public subscribers for the blog and the date they first subscribed. That is a good sample of all feed subscribers - not perfect - but good enough to get broad trends on what’s going on with almost any blog. Let’s assume a strong correlation between total readers and public feed subscribers - and call this the “Reader Index”.
I took the five or six high-traffic, best blogs I read. TechCrunch (Mike Arrington), Let the good times roll (Guy Kawasaki), Ray Ozzie (Microsoft’s CTO) , John Battelle, Venture Blog (mostly David Hornik) and Seth Godin. Then I used Excel Pivoting capabilities to build a cumulative chart of public Bloglines readers, to see if I could find the pattern I earlier posted about:
The data is fascinating. Let’s start with TechCrunch first.
This blog is not even a year’s old and counts over 20,000 feed readers. Now look at how smooth the seeding phase looks like - this blog started slowly, then things started to accelerate around August ‘05 and now you can see very nice growth, very steady. By the way this is one of the best blogs on Web 2.0, highly recommended.
John Battelle’s has a similar pattern. Now Seth Godin. His blog started late 2003. Did you notice the slow start - the explonential growth phase, and what now seems to be slower growth? Very interesting, maybe we all want Seth to write another book.
In an earlier post I was talking about how strong communities provide almost instantaneous readers for a well known and popular character - take the VC community and compare Venture Blog:
With Guy Kawasaki, who started a new blog earlier this year. Very fast initial growth, quickly reaching a saturation point, within days.
This is even more clear looking at Microsoft’s new CTO, Ray Ozzie, who started blogging in November ‘05.
Now benchmarking these blogs once against another (as of 1/29/2005):
(1) Guy Kawasaki
About: Famous entrepreneur, VC
Total Bloglines Subscribers: 878
Public profiles: 275 (31%)
Weekly subscriber growth: 12.2%
Time to get the 1st hundred public bloglines subscribers: 3 days
(2) Techcrunch
About: Web 2.0 reference site
Total Bloglines Subscribers: 3992
Public profiles: 1465 (37%)
Weekly subscriber growth: 3.9%
Time to 100 pub subs: 62 days
(3) Ray Ozzie
About: Ray is Microsoft’s new CTO
Total Bloglines Subscribers: 1063
Public profiles: 399 (38%)
Weekly subscriber growth: 2.2%
Time to 100 pub subs: 1 day
(4) Seth Godin
About: Seth is a viral marketing guru
Total Bloglines Subscribers: 3408
Public profiles: 888 (26%)
Weekly subscriber growth: 0.9%
Time to 100 pub subs: 287 days
(5) John Battelle
About: John covers the Yahoo/Google wars
Total Bloglines Subscribers: 4331
Public profiles: 1300 (30%)
Weekly subscriber growth: 1.2%
Time to 100 pub subs: 165 days
(6) Venture Blog
About: David is an influencial Web 2.0 VC
Total Bloglines Subscribers: 7904
Public profiles: 1466 (19%)
Weekly subscriber growth: 1.7%
Time to 100 pub subs: 233 days
Granted - data is far from perfect and there is a lot more than just looking at these numbers. But there are a few lessons to be learned from the pros. What do you think?
[Read related other posts on blogging analytical experiments: “Using Web analytics to drive more traffic to my site” series - part 1 part 2 part 3 part 4 part 5 part 6 part 7 part 8 part 9 part 10 part 11 - and Blogging success: “what lessons have you learned”, A Blogger’s theory].
A Bloggers’ Theory
I’m committed to limiting my time investment in blogging (see rule #14), so let’s get to the point: looking at analytics data and correlating with market events, blog posts, other bloggers’ comments, etc - I’m seeing a pattern for readership growth.
The basic cycle goes like this:
(1) Seeding. You start a blog, write 8 or 10 interesting posts, and advertise your blog as much as possible (link on your email signature/forums/etc). Soon enough, another blogger will write about you or point to you (blogroll, etc).
(2) Exponential growth. After reaching some critical mass of readers, readership growth accelerates all of the sudden - typically because a popular blogger has written about you, or there is a press article pointing to your site.
(3) Organic growth. Your base keeps growing but it’s slooooowww. You’re incapable to sustaining the growth rates you had in phase 2.
The challenge then becomes to reach out to another community of readers, and starting this cycle again (or wave). For example, if the initial community was the “Web analytics gurus” - maybe your next community will be “Search Engine Marketing gurus”. In this case, you need to start the seeding cycle again.
In the context of this simple theory, it’s important to note that the characteristics of the communities you are targeting will determine how successful you’ll be. Community characteristics such as:
(a) Size: the “Search Engine Marketing” community is much larger than the “Web analytics” community
(b) Viral quality: the “Venture Capital” community is a lot more inter-connected than the “people with blue eyes” community
(c) Maturity: According to some studies, only 8-10% of Americans regularly read blogs. If there is no blogging culture in a given community, it’s going to be a lot harder to seed.
As far as this blog is concerned, I’ve seen 2 waves already: Web analytics gurus (started in ~Feb 2005), then the Google analytics followers (~November 2005). Now working on a new wave…
[Read related articles: “Using Web analytics to drive more traffic to my site” series - part 1 part 2 part 3 part 4 part 5 part 6 part 7 part 8 part 9 part 10 part 11 - and Blogging success: “what lessons have you learned“].
Blogging success: “What lessons have you learned”
I got an email from a loyal reader this week end asking me point blank what I had learned from my blogging experiments [Described in the “Using Web analytics to drive more traffic to my site” series - part 1 part 2 part 3 part 4 part 5 part 6 part 7 part 8 part 9 part 10 part 11].
I’m a little embarassed to say that I don’t have a nicely packaged to-do list for you. For one, I haven’t achieved success and I am still doings TONS of experiments as some of you may have noticed (site layout, polls, etc).
But I did keep track of my ideas in a Notepad file (Ideas - not solutions). And since I don’t want to spend 29H13MINS writing this post (see #14) - here are the quick notes:
1 - Blog for a purpose (sell a product? ego? make money? something else) and stick to it
2 � Why should visitors read your blog (succint mission statement)
3 - Learn to recognize and ignore junk traffic (spent too much time slicing and dicing “junk” = people who landed here for Costa Rica Coffee, etc)
4 - Treasure your most valuable visitors (like Eric Butler@Webtrends, because they provide valuable feedback publicly or privately)
5 - Get people to return (because that’s your “base” = returning users)
6 - Get people to subscribe (because they return)
7 - Engage your audience through comments (because they return too)
8 - Have a �blogosphere presence� (commenting on other relevant blogs drives potential loyal subscribers)
9 - Leave quality posts on top of your blog (for increasing chances of getting people to return)
10 - Forget Adsense (waste of real estate, not worth the $15/mo)
11 - Don�t over-analyze (spent too many hours looking at Fireclick)
12 - RSS Readership is the only metric relevant to bloggers (because that’s your audience)
13 - Use Feedburner (they ROCK)
14 - Watch your time investment (writing stuff, making mods, looking at reports, etc)
15 - And� don�t be shy! (I’m free to blog, free to be right, free to be wrong)
Satisfied? Can we go home now? Not quite. I’m still trying to get my arms around other more general “blogging success” issues. Will post more soon. Tahhh.
Poll: Google vs the Government
I’m really interested in hearing what you think + this is a perfect opportunity for me to try a new service called dPolls. So here is goes:
Background. The U.S. Justice Department (DOJ) has subpoenaed Google Inc. to turn over data including search terms as part of a government probe of online pornography. Google rejected the DOJ’s subpoena while other portals Microsoft Corp., Yahoo! Inc. and America Online, Inc. have agreed to provide the requested data.
Eric Peterson @ Visual Sciences
Rumor: Bob Chatham leaving Forrester for Visual Sciences. As an reputed analyst, Bob has a unique understanding of e-commerce technologies and knows all the Web analytics vendors very well - this is a tremendous accomplishment for Visual and clearly validates that they have something going on. Congrats to both and best of luck.
The dark side of patents
In his Blackberry blog Aaron Johnson points us to an article on the New Yorker about the NTP/RIM lawsuit, with interesting points regarding the US patent system.
“…The BlackBerry will become the quintessential symbol of something else: a patent system that is out of control.”
I didn’t know much about NTP, but I find this paragraph illuminating:
Unfortunately, the real innovations in this case are not technological but legal. N.T.P. is a company without employees or products. It never tried to build a real business around its patents, and it never licensed them to others, until R.I.M. demonstrated just how lucrative wireless e-mail could be. No one alleges that R.I.M. used N.T.P.�s patents to build the BlackBerry; it invented its system from scratch. N.T.P., holding the patent on an idea and a crude design, waited until another company created a successful business based on similar ideas, and then headed to court.
Sounds familiar?