Service-based analysis on Alexa

Here's a comparison of eBay, Craigslist, Edgeio, Etsy, and iOffer.

eBay obviously leads the pack, with Craigslist in second place, followed by iOffer and Etsy, then Edgeio sneaking in towards the bottom. The growth rate of Etsy is phenomenal, breaking the 10K rank in as little as 18 months. I was really stunned to see that Edgeio comes in last place and leveled off significantly compared to Etsy. Edgeio probably has the most buzz surrounding it, while I imagine Etsy caters to quite a vocal niche group (although, they might be a hard demographic because most people into Arts/Crafts aren't similarly interested in technology).

This was my guess as to how the chart would look, rank-wise:

1. eBay
2. Craigslist
3. Edgeio
4. Etsy
5. iOffer

I typically analyze other similar services to gauge potential success. It's quite clear that the marketplace industry isn't dead... Simply reviving a business model or changing the way something is done seems to be sufficient in driving traffic.

Registration (cont)

My registration woes have subsided after seeing "Useless Account". It seems +5,400 users have no problem creating an account for the sake of simply creating an account. That's right, "Useless Account" is pointless... All you do is create an account and modify it. It's obviously a hoax website, and pretty funny at that (given the number of people who actually signed up).

When I think of Wantsy, the registration process is really simple; an e-mail address and password. That's it... It can even be a part of the listing process, so it's not a big deal. On the seller side, if you see someone that wants your item, why wouldn't you create an account?

Development

The most complex part of a web-based service startup is the development process. You have to figure out the UI, among other things... While most people believe the UI will "make or break" a service, that simply isn't true most of the time. Craigslist is ugly, no question about that... But it's successful because it services a real need. On the other hand, a site with an overly complex UI can scare users away. I really like to consider the UI to be a form of art (and as we all know, forms of art can be ugly yet in demand). I like a service that has both a simple and good looking UI, while meeting a real consumer demand - Hopefully we are doing just that.

The development period is also like the "quiet period"... You build, you test, you build, you test, you tweak, you build. The "testing" and the "tweaking" are the vocal aspects where other members input their thoughts. The rest of the time, it's just keyboards punching in code.

A little stressful? Yes... But that's what a startup is all about.

Confidence is building...

I must say that my confidence is building... Writing these blog posts really helps get everything off my mind so that I'm not trying to think about too much stuff at once. I consider this blog my "brain cache"... If there's something important, I put it on this blog so that I can "forget" about it. If I need to recall something, I can find it here, in my brain cache.

My confidence is getting higher that this startup can become successful. I'm excited about the fact that I would enjoy the service and look forward to using it; I'm pretty sure I'm not the only person who would feel this way. The UI layout looks pretty good, at least IMO, and there really isn't anything that would throw a user into "feature shock".

My other fear (a much bigger fear) was that it would be hard to capture a market. I'm not really afraid anymore - I know that I will use the service, and if I find it useful, so will others. There is already a proven market, so we're not creating anything from scratch; we're simply exploring an area that others have neglected.

While all of the other markets that I previously discussed are good, I don't really know them all that well. I haven't personally experienced the problem that I would like to solve within each of those markets. Those other markets aren't really traction gainers, either - although they might be able to bring in much higher RPU (revenue per user), I would rather make more people happy and take less revenue.

Funding

What will we do when it comes to funding? For starters, a web-based business doesn't take all that much capital. It's my belief that startups should shy away from VC money as long as possible. If needed, fund internally through friends and family. If you still need more capital, get in touch with some angel investors. As a last resort, head for the VC's.

I think VC's introduce a level of unneeded complexity, especially at the seed stage level. Not only do you have to meet expectations, but you also give up a lot of control - your "solution" is no longer your solution... It's a solution determined to be satisfiable by the VC's.

This opinion is largely shared with the founders of 37Signals. Don't take funding unless you need it. In the "web 2.0" world, I see many companies doing just that. I may be alone on this, but I don't think an unproven blog widget requires $5 million in VC funding after the first week of operation.

Do you have a good idea?

How do you know when you have a good idea? There are two methods (that I personally know of) that might turn on the light-bulb above an entrepreneur's head.

1. You think of a solution to a problem that (potentially) plagues many people. You may not necessarily be one of those affected people, but you believe strongly that people will find your service or product useful.
2. You run across a problem and think to yourself "there has to be a better way". You create a service or product to fulfill your desire... In the process, you realize that your product or service will benefit many other people who share a similar problem.

If you take a look at the majority of the 800 pound gorillas in the tech industry, the founders started with one thing in mind - fix a problem that they have run across. Rarely does a huge success come from someone trying to monetize a market that they know nothing about. Only those who experience a problem can create a successful solution.

So, if you run across a problem, identify it as potentially common, and figure out a solution, you could very well have the next million dollar idea. If you're simply seeking a market to monetize, and create a solution to a problem that you have never experienced, you're probably setting yourself up for a failure. Make solutions for the problems which you know... When you're doing math, always find and read the problem before writing the solution.

Here are some examples;

Problem 1: I keep losing my bookmarks when I upgrade my PC, and my bookmarks are only available on my PC.

Solution 1: Delicious

Problem 2: It's hard to find stuff on the web, so I'm going to organize all of my findings.

Solution 2: Yahoo!

Problem 3: Current search engines are corrupt and I can't find 90% of the information I'm seeking (plus I'm need a thesis)

Solution 3: Google

Marketing

Since the rise of the internet, marketing has become easier. Since the rise of blogs, marketing has become much easier. You can now throw hundreds of thousands of people at your service in a matter of hours by getting good coverage in the blogosphere (as a best case scenario). Obviously the majority of those people won't become your customer, but your name will be etched in their mind... It could either be a good "etching", or a bad "etching". If it's the latter, you might be screwed.

That begins the WOM (word of mouth) campaign... As long as you can keep your service innovative and useful, you can maintain a level of growth for years to come. Your selling point is that you always have innovative features and you solve a real problem, so people often refer you to others - that's what I define as basic virility. Under this definition is MySpace - they didn't rely on external widgets to draw the user in - they were just so "cool" that friends bugged friends to sign up. Their features keep people coming to the site.

On the other hand, I define widget virility as something that draws the user in externally using widgets (who would have thought?). For example, YouTube's success was probably a direct result of their embedded video player... Delicious' or FeedBurner's success could be attributed to their chicklet widgets.

I guess the hardest part is getting your service in front of someone. Even if your startup solves everyone's problem, it's worthless if nobody knows about it. It just simply isn't a case of "build it, and they will come". Who are "they"? How will you capture their attention?

The way I imagine Wantsy succeeding is by drawing in users who are interested in purchasing an item - i.e. the existing wanted-ad market. As a previous high-revenue seller on eBay, this would clearly be a driving force for other sellers. If I have an item that I'm getting ready to post on eBay, why not do a quick search on Wantsy first to see if there is an immediate demand? If I'm a buyer, why not create a quick listing of the item that I will be seeking? Even if I plan on using eBay, I can still create a wanted ad and get the best of both worlds.

We aren't competing with eBay, Craigslist, Edgeio, or Etsy - we're simply supplementing them.