Coffee, Sun & Technology

So we’ve been talking to a few people about Perenety and what we’re building - carefully avoiding the GYM (Google, Yahoo, Microsoft), for reasons that will become obvious soon.

So reports like this one certainly come as a surprise:

97 visits from the Google network for the week - close to 200 since early February. The number was zero prior to Feb 4th. What’s even more interesting is the lack of drill-down information for these visits, i.e. I can’t tell what they’ve been looking at using my Google Analytics reports.

Anyway, I have an idea:

Distance: 6.3 mi (about 8 mins)

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.

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.

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.

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!