MappingTheWeb //

37signals has solified itself among the elite providers of simple, clean, web-based apps on the Internet. I have spoken very highly of the company in the past and many have expressed the same views. Not only is the firm popular for its products, but also many other things including:

• Ruby On Rails
• Signal vs. Noise blog
• Job / Gig Board

In addition, many may also be aware that 37signals has launched a popular book about how to build a successful web-based application. This book is $19 for the PDF version, $29 for the paperback edition, or best of all - FREE if you want to read the online version.

If you are currently working on a web-based start-up or plan on doing so in the near future, this read is a MUST. I cannot recommend it enough. The outline, as well as the principles and concepts, are easy-to-understand and simple to implement, although many fail to do so. By carefully reading this wonderful bit of text, you will no doubt better position yourself (and company) for success.

Here is a break-down of the book:

• 16 chapters
• 91 essays
• Under 200 pages

The book walks you step-by-step through pre-launch, launch, promotion, support, and even post-launch, ensuring successful progression along the way. It is available in numerous languages and is a very easy read. I will leave you with Seth Godin comments about the book:

“Every once in a while, a book comes out of left field that changes just about everything. This is one of those books. Ignore it at your peril.”

Individuals who partake in the buying and selling of domain names are called “domainers”. These individuals can also create revenues by generating traffic to the given properties, then maxizing the ad revenue per page view. By producing tailored landing pages and optimizing for search engines, the influx of traffic can be constant and ongoing, creating a flow of income.

The former tactic sounds very similar to the real world and real estate investing. Essentially, they are the same thing. In either case, the investor is purchasing some ‘property’ in hopes that it will increase in value. Subsequently, a sale will produce a capital gain. 

Many of these investors possess comprehensive portfolios of domain names, containing tens of thousands of names or more. The names range from high-end .com properties to smaller, more niche, long tail offerings. As mentioned above, these fortune-seekers can generate revenue not only via a sale, but also via traffic.

World famous domainers include:

• Yun Ye - probably the most famous domainer; Vancouver man who sold this 100,000+ domain portfolio to Marchex for $164 million in 2004
• Frank Schilling - his sites apparently generate 1% of all Yahoo ad revenues, or over $30 million a year
• Rick Schwartz - multi-millionaire who turned $1,800 into over $20 million; has owned such domains as men.com and porno.com

The domain investing world is a very interesting space that I would like to learn more about. It is a very underground, low profile industry due to its (sometimes) unethical and shifty nature. In any case, it is captivating and opens your mind to a whole new world of business on the Internet.

Note: I would highly recommend reading this article on domain investing. It is not only entertaining, but very educating.

Last week, Jason Calcanis launched his pet project, a human-powered search called Mahalo. The engine provides company-edited results, as well as user-submitted results.

A typical search results page is comprised of several new areas:

• The Mahalo Top 7 - seven hand-picked results from the editors
• Guide Note - additional information and other relevant search queries
• Fast Facts - self-explanatory

A given SERP also gives users the ability to add relevant links and results for that given query. Finally, a discussion area is available for every query. This allows users to provide further thoughts, above and beyond the search results.

Some quick facts about Mahalo:

• 40 full-time editors
• 4,000 results pages created thus far
• 10,000 pages predicted by the end of 2007
• 25,000 pages predicted by the end of 2008
• 4 years - how long Calcanis says he can run the business without revenues

Once again, the scenario of ‘human vs. computer’ arises. Will Mahalo be able to provide better, more relevant results on an ongoing, frequent basis? My guess is no. I do not believe that a small team of editors can keep up to the constantly-expanding, dynamic nature of the web.

I am eager to see the offering put forth by Wikipedia founder Jimmy Wales. He is working on a human-powered search engine of his own. Apparently, these tech industry veterans believe that they can overcome the speed and power of the algorithm-based engines. I am full of doubts. And until they can provide me wrong, I think I will favour the algorithm-based players (especially for long tail queries ).

The buzz and hype of the new web landscape has subsided considerably. Yet, to my surprise, more and more ‘web 2.0′ start-ups continue to operate with the cheesiest, most over-used strategies.

• “We’re currently in stealth mode.”
• “Our AJAX widget will VOIP the RSS while podcasting to bloggers in a wiki-like fashion.”
• Our target market is anyone who uses the Internet.”

These crack me up. Like… give us all a break. My favourite though… is one that is not as apparent, or even stated anywhere. It pertains to the revenue models of these ventures. Contrary to what many may think (especially the companies themselves), a revenue model was never part of the initial strategy.

To some, this may come as surprising. To others, it’s common knowledge. Many of these start-ups launch a FREE product with the intention of exploding onto the market, harnessing viral growth, and eventually selling to a larger, more established player. WOW, there is it. The revenue model is actually an exit strategy. I think that is a web 2.0 trend in itself.

Web 2.0 revenue model = Exit strategy

This makes sense for naive Internet entrepreneurs because:

• It eliminates that monetary barrier to entry for users (as mentioned above)
• They have no idea how to monetize a product in the first place AND/OR they find comfort in the the phrase, “We’ll build traffic, then figure out how to monetize later”.
• The company realizes that if they do eventually implement a revenue model (advertising, subscription, etc…), they will piss off users and many will defect from the site or service.

So, as you can see, companies resort to the FREE model with the intention of ’slapping on’ a revenue model somewhere down the road. There never was a revenue model to begin with.

Now, don’t get me wrong… I love free products and don’t want to pay for anything if I don’t have to. But from a business perspective, that is not a sustainable or savvy model.

It can be tough to get PR on the web - especially if you’re a Canadian start-up. I know this from personal experience. I’ve worked or consulted for several Canadian start-ups. Residing in Victoria, BC, I can understand that Canada isn’t exactly Silicon Valley. But this great country should not be overlooked when it comes to new technology. Numerous successful web 2.0 ventures can trace their roots back to Canada.

For this very reason, I am excited when new, Canadian technology blogs sprout up. A recent entrant into the space, StartUpNorth, is looking to put the spotlight on little-known Canadian start-ups. This should help shine some light on entrepreneurial ventures of the North. Having said that, it is not the first of its kind. Other popular Canadian technology blogs that profile start-ups include Maple Leaf 2.0 and Mathew Ingram’s blog. I highly recommend both. Add them to your RSS reader.

MappingTheWeb also profiles Canadian start-ups from time to time.

The point is that new blogs or entrants in the space should not be considered competition, but rather added coverage and exposure for the Canadian tech industry. This benefits us all and solidifies Canada’s reputation for innovation on the web.

Watch out Silicon Valley… Beware the black sheep of the Internet…