Recently Google's Kevin Marks was interviewed by cNet, where he said:
OK, stop and think about your application. Do you really need to be a standalone site? Do you really want to write user registration code, or would you be better off taking your application and bringing these other sites where there are lots of users already and where they have already expressed both their personal information and their connections to other people?
The answer to that is of course you want to be your own destination. Writing registration code once means you can re-use it over and over again on various projects. If you can program a successful widget or application then you are not the type who thinks registration code is a roadblock.
Some of the most successful viral applications (like Paypal and YouTube) leveraged other platforms for growth, but a large part of their success was that they also chose to be destinations.
If you create a destination vs exclusively being a platform on another site, you...
- have more direct contact with your customers (which often creates new revenue streams)
- have greater organic growth opportunities due to a wider variety of organic distribution channels (rather than being someone else's user generated content)
- make it easier for reporters to contact you. Public relations is huge for spreading viral stories and growing viral networks (look at how many times Plentyoffish was in the press)
- create something that is easy to link at, where you control the link equity and attention and use it to profit as you wish (ads, market new related ideas, change your business model, etc.)
- can extend your offering out into related fields and/or create a premium service
- are more likely to receive funding if needed and can sell your business for a higher price point (since your business has more of what Warren Buffet considers a moat around it)
Consider some of the add ins that sold for millions or billions of dollars because they chose to become destinations
- If Paypal was not a destination, eBay could have killed them and/or bought them for a small fraction of their potential value.
- If Del.icio.us or MyBlogLog was just a Firefox extension would Yahoo! have bought them?
- If Feedburner was a browser plug-in of some sort would Google have paid an estimated $100 million for them?
- If YouTube was not a destination could they have competed with Google Video and got bought for $1.65 billion?
Overture, which pioneered the paid search field, once had a dominant market-share, but was afraid of becoming a search destination because they thought that it could cost them syndication partnerships. The day AOL signed on to syndicate Google's ads, Overture became irrelevant as a business force. They bought a couple search engines in an attempt to become a destination, but it was too little too late. And Overture was bought by Yahoo! for about 1% of what Google is worth today. The pioneer in the paid search model that drives the current web economy sold for about the same price as a marginally profitable free video hosting site, largely because Overture failed to become a destination. Oops.
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