Online classifieds vertical search engine Edgeio is on its last breath and on sale to the highest bidder. A bad sign for job search verticals?
Critics will cite this as the first domino to fall in a row that is sure to include everyone from Oodle to Simply Hired to Jobalot (yep, they’re still around) and on-and-on. It’s not the one with the most content that wins. It’s the one with the most money.
Fair enough. But there are those who believe Edgeio was an isolated incident. Oodle CEO Craig Donato says,
I don’t believe this signals any inherent weakness in the jobs space (or in the larger classifieds listings space). Indeed, I think the business opportunity for young companies in this area continues to be huge.
That said, in addition to a challenging 2008, most veterans are predicting a cleansing that, for the most part, is healthy. There’s no slow-down in new businesses, but the number of companies flooding Techcrunch’s deadpool is noticeably increasing. This trend is likely to hit the jobs space, as well, to the surprise of few. Said Donato,
I expect we’ll see a lot more shut downs in the world of Web 2.0. A lot of startups have been founded in the last 2-3 years. It’s never been cheaper or easier to getting something going but criteria for success remains the same. As such, I think we’re starting to see a different shape funnel (with a much larger opening but the same size endpoint). The result is a lot more Darwinian process for startups than we’ve historically seen.
Only time will tell. I tend to enjoy life more than death, so I’m rooting for the underdogs this holiday season. However, the natural course of things says pruning the hedges is good for long term health of any ecosystem.
December 12th, 2007 at 6:25 pm
A shame - I like the edgeio interface for uploading records - certainly more usable than Google Base
December 13th, 2007 at 3:40 am
edgeio was not really a vertical search engine for online classifieds.
It was a content publication and distribution system that no one really understood and never gained traction.
A grand vision that never materialized. Alas.
December 13th, 2007 at 11:05 am
I think that both you and Craig Donato are correct. Edgeio failed for its own particular reasons that are not necessarily indicative of the issues facing the industry. As I wrote earlier this week about Edgeio’s CEO blaming his investors for the company’s failure…
…Teare’s comments remind me of the scene in Wedding Crashers when Owen Wilson, sitting at the breakfast table, remarks that maybe it was the soft mattress that caused Vince Vaughn to have such rough night of sleep the night before. Vince Vaughn replies, “Yeah, it could have been that - or maybe it was the midnight rape or the gay, nude art show that took place in my room afterwards.” Maybe it was investors that caused Edgeio to fail, or perhaps it was because the site required custom meta tags on every single page of a contributor’s site, or that Edgeio used a completely bizarre XML format that was unique to their site and required a massive rewrite to accommodate the particular demands of a site that never climbed high enough in site rankings to justify the effort, or the fact that the site was completely piecemeal and unprofessional in its look and appearance, which caused serious doubts as to its stability, longevity, and ultimate value to users, contributors, or advertisers. Or perhaps their failure was due to the fact that they never really had a revenue model fully developed or executed that would turn a slightly interesting site/idea into a real business. The last time I looked, generating revenue through the delivery of sufficient value to customers at a level that eventually exceeds costs is the most certain manner by which a business can succeed. Relying on investors to see the future isn’t on the list, no matter how long you make it.
But I also think you are correct in pointing out that the next year or two will be extremely challenging for newer start-ups in this space. There will be plenty of consolidation, failure, pruning, fierce competition, and general chaos. Despite the turbulent environment, however, I believe the pace of new entrants into the market will not slow down much at all next year, with new entrants seemingly joining the fray every week. As well, I think there will also be aggressive innovation from some players that will push the industry forward and raise the bar for the entire industry. Undoubtedly, it will continue to be one of the most dynamic, exciting industries to be a part of in the coming year.
December 13th, 2007 at 1:30 pm
My prediction is most will fall at some point! Without a solid foundation you have nothing. Cash is king right now, not content. Each and every site is banking their future on ad sales which is becoming progressively more and more difficult if not impossible. There is an old saying we use in sales. “When you have a confusion you have a no” This applies to Web 2.0. Were on start-up overload and if you aren’t bought it’s just a matter of time. The marketplace is becoming confused and this is the #1 primary reason for the demise of Edgeio. Right now the big opportunity is for Niche based sites that focus on a smaller market and a smaller market segment. Leave the “taking over of the world” to the big guys, they appear to be doing a pretty good job of it. Smaller niche sites that provide better products and service with reasonable return expectations is where things are headed.
December 13th, 2007 at 2:23 pm
Michael Arrington’s reflections from earlier in the week are telling, although they should be taken in context of the post as a whole…
“It seemed like every board meeting I was saying the same thing - stop spending money, stop hiring, stop. I was out voted, and the company followed its own path…
Taking risks doesn’t mean raising more money than you realistically need. It doesn’t mean hiring 20 people to do what 4 can do just fine. And it certainly doesn’t mean taking massive losses in exchange for a small amount of revenue.”
http://www.techcrunch.com/2007/12/09/the-twice-shy-entrepreneur/
December 13th, 2007 at 2:32 pm
Donato was quoted saying the following about startups: “I think we’re starting to see a different shape funnel (with a much larger opening but the same size endpoint). The result is a lot more Darwinian process for startups than we’ve historically seen.”
I agree that the lowering of barriers to entry to start and market a new companies has resulted in more initial startups, but it seems like having lower costs should make it easier to be profitable. The effect of lower costs is probably relatively insignificant for large organizations, but it should make a big difference for “micro-ISV” firms, niche job boards, and other small companies.