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Thursday, November 23, 2006

Lessons from Downsizing at Insider Pages and Judy's Book

There are many insightful posts floating around about the recent lowering of expectations at local search startups like Judy's Book and Insider Pages; Niki Scevak's is one of them.

I disagree with one of the points, though:

"...the sales component of the business has been the toughest to crack, and at some point in time it makes sense for a sales person to lead the ship. Verizon Superpages, for instance, is simply a large sales organization and not much else."

A startup cannot be a venerable old sales machine. Internet search and navigation plays, vertical communities, and networking sites can do amazing things. One of them is not to be another Verizon Superpages. RedToronto tried that model - without any content to speak of, they tried to copy the old listings companies from the ground up, on a shoestring. That means a lot of selling, but little substance. In spite of some good ideas lurking under the hood (including Green Pages) it didn't work out too well, and they're currently retooling.

Think about Google in 1998. 1998. 2000. 2001. Was it at any of those stages "a large sales organization and not much else"? No. They built something remarkable that you can sell ads against. They built valuable inventory. To do that requires capital, genius, and also a shocking degree of frugality (at first).

Online startups shouldn't be tasked with just building "sales organizations" alone. Because what are you selling?

That leads to a lot of other conclusions about how funds should be allocated by entrepreneurs, and how long their runway should be, funding-wise. Just imagine what our world might be like today had investors killed the Google Golden Goose in 2000, by rushing to over-monetize what wasn't finished, compelling, or dominant yet. Or if they had neglected the corporate culture in favor of working the phones.

Posted by Andrew Goodman




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