HITS AND RUNS
The number one discussion thread on Techmeme this morning is around "the birth of Obvious Corp.". As Om Malik at GigaOm explains:
"Odeo, a San Francisco-based podcasting start-up has decided to call it
a day. The company started by Pyra Labs (Blogger) co-founder Evan
Williams has completed a management buyout. Evan Williams, Biz Stone
and other Odeo employees have started a new company called Obvious Corp1., which has acquired Odeo assets from podcasting company’s venture capital backers..."
"Williams’ very public mea culpa7
at the Web Apps conference was an example of his willingness to zig,
when everyone zagged. In private conversations, he had expressed doubts
about the current model - where everyone wants to sell to an Internet
giant. He wanted a model that was different - small, experimental and
almost lab like. Future plans, according to those close to the company,
include charging for all new things they come-up with."
TechCrunch also has a good summary of the events to date.
Two questions of real interest in all this from my perspective. In order of increasing importance, they are:
1. What does this imply, if anything, for the future of the podcasting business? In recent months, podcasting has received almost the same amount of buzz and interest bewtowed upon social networking businesses by investors large and small, public and private.
There is a faint echo of the "Sevin Rose VC firm implication that the traditional VC business is broken" (via Fred Wilson), in the withdrawal of Odeo from the podcasting business.
Something to chew on.
Here's how Evan Williams describes the changes in his thinking:
"The New Model
We are attempting to create a new
model for building and running web products. Nearly everyone I know in
the Internet business is either at one of the giants, wishing they were
at a startup, or at a startup that hopes get bought by a giant.
The
models for how these types of companies build and launch products is
fairly well-known—although some certainly do it better than others. My
theory is that a confluence of factors are paving the way for a
different type of company:
Sites are cheaper and faster to build
The consumer web is increasingly hits-driven and increasingly crowded,
which makes it more difficult to predict what's going to work.
Sites that do get attention can make money with advertising and/or subscriptions.
2. What does the above description of the "New Model" for Web 2.0 remind you of? Especially the bit about "the consumer web" being "increasingly hit-driven"?
Evan may be describing the emergence of a production company model borrowed from the traditional media (TV and movies) business and the software games business, where the development of "hits" is separated from the distribution.
Using that metaphor, Evan may be trying to build the equivalent of an independent, small studio here.
Here's how Evan describes his new company's modus operandi:
"The Obvious model goes something like this:
Build things cheaply and rapidly by keeping teams small and self-organized.
Leverage technology, know-how, and infrastructure across products (but
brand them separately, so they're focused and easy to understand)
Use the aggregate attention and user base of the network to gain
traction for new services faster than they could gain awareness
independently.
As services mature, the goal is to get them to
profitability with advertising and/or subscriptions, so they can add to
the network (and fund more building)."
This description has shades of what 37Signals is focused on in the Web 2.0 online consumer software space (see this post by TechCrunch for more).
In some ways, one can argue that we're already at the "new "hit" production separated from the distribution model".
Most of the Web 2.0 startups today are taking on the risk of creating a hit "feature", be it user-generated videos like YouTube, or communities like MySpace or Facebook, or tags like del.icio.us.
Then the "internet giants" sweep in to acquire the hits, after the risks of developing the new feature have been mitigated somewhat, and add massive distribution.
Thus turning the feature into a product hopefully, as Google is newly focused on doing.
So the New Model may just be a more formalized, systematized, and standalone version of the Old Model.
Obvious when you really think about it.
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