Root ideas, categories & adjective verticals - lessons for the Groupon era
Here are some notes as I tried to fit Groupon’s rapid growth into a pattern of some of the previous internet blockbusters we’ve seen.
The blockbuster models created ‘root ideas’ and were the horizontals in the new category which spawned ecosystems, copycats and derivatives that were adjective verticals.
Blockbuster - Category - Root idea
Google - search - keywords
Technorati - blogs - tags
Facebook - social network - profiles
Twitter - microblogs - streams
Groupon - daily deals - deals
The lesson here is to look beyond the ‘category’ to the root idea and than to understand how the ecosystem around this new root idea would form.
For example, google’s search is both horizontal and vertical in the big distinct categories i.e. images, shopping etc. leaving little room for true search verticals. However, the keywords ecosystem has spawned numerous ad networks, SEO, SEM and other companies and opened up numerous pay-per-click arbitrage models.
So, if one were to apply that to facebook, one would ask is the opportunity in building a vertical social network or in building an ecosystem around rich profiles. Quora has rich expert profiles, Linked-in rich resume profiles etc.
Streams similar to tags are like salt and have completely dissolved into the internet soup and so just as every object now is being tagged and we all ask technorati-who?, every conversation is now a stream. Twitter unlike technorati has profiles, i.e. rich press-release-profiles that will ensure their survival.
Examples of how the Press release is the metaphor to understand twitter.
- breaking news in a far-off and remote spot is essentially a press release by an observer
- as is the fact that the German chancellor is going to make a trip to the United states,
- as is the fact that techcrunch has just released a new blog-post)
Which brings us to today’s Groupon. The category is daily deals, they have infused the word ‘deal’ with specific meaning & characteristics much like google did with keywords.
A whole deal-centric ecosystem is forming and there will be multiple opportunities there. But deal verticals need to be careful, think of Amazon here as it moved out of books into different categories and created an Amazon marketplace. Groupon, LivingSocial and Gilt could become large Deal marketplaces like Amazon, eBay, etsy etc. Opportunistic players are going to find it hard to carve out separate verticals unless they have a unique niche.
As an exercise lets think of how StyleMint.com will evolve. StyleMint is a celebrity-endorsed commerce site recently launced by BeachMint.com. The tagline reads An exclusive t-shirt collection designed by Mary-Kate Olsen and Ashley Olsen.
To be succesful, besides its core competence i.e. celebrity-endorsements, t-shirt design it needs manufacturing, logistics, distribution, shipping. It needs an ecommerce platform, affiliate programs, online marketing, email lists and daily deals. It needs facebook, twitter integration, viral word-of-mouth and branding. All with a deal/shopping2.0 flavor
But since it is not a ‘regular’ ecommerce storefront it can’t use any of the services available such as the the Amazon marketplace, Big Commerce, ebay etc. It can use one of the new emerging storefronts i.e. payvment.com, shopify.com and the like but they are all emerging players and not yet established and feature-rich. So the deep-pocketed StyleMint builds out a unique platform.
However, during the 24 months that they are doing this, Groupon builds out a massive horizontal on daily deals with a huge userbase (70 million today - one can prorate it to about 300m in 24 months) and begins to start adding a ‘celebrity-endorsed’ daily deal add-on. 6 months later StyleMint decides to ‘partner’ with Groupon citing the ‘economies of scale’ in leveraging the superior technology & distribution & myriad other benefits that Groupon affords.
When the mop-up by Groupon of all verticals-of-interest begins to happen the leaders of the ancillary services that are being provided to the motley crew of home-grown verticals will stand to succeed in a big way.
What are those services. Deal re-sellers, Deal managers, Deal white label platforms, Deal ad-networks and other innovative ideas. In other words the deal ecosystem.
Root ideas, categories & adjective verticals - lessons for the Groupon era
Here are some notes as I tried to fit Groupon’s rapid growth into a pattern of some of the previous internet blockbusters we’ve seen.
The blockbuster models created ‘root ideas’ and were the horizontals in the new category which spawned ecosystems, copycats and derivatives that were adjective verticals.
Blockbuster - Category - Root idea
Google - search - keywords
Technorati - blogs - tags
Facebook - social network - profiles
Twitter - microblogs - streams
Groupon - daily deals - deals
The lesson here is to look beyond the ‘category’ to the root idea and than to understand how the ecosystem around this new root idea would form.
For example, google’s search is both horizontal and vertical in the big distinct categories i.e. images, shopping etc. leaving little room for true search verticals. However, the keywords ecosystem has spawned numerous ad networks, SEO, SEM and other companies and opened up numerous pay-per-click arbitrage models.
So, if one were to apply that to facebook, one would ask is the opportunity in building a vertical social network or in building an ecosystem around rich profiles. Quora has rich expert profiles, Linked-in rich resume profiles etc.
Streams similar to tags are like salt and have completely dissolved into the internet soup and so just as every object now is being tagged and we all ask technorati-who?, every conversation is now a stream. Twitter unlike technorati has profiles, i.e. rich press-release-profiles that will ensure their survival.
Examples of how the Press release is the metaphor to understand twitter.
- breaking news in a far-off and remote spot is essentially a press release by an observer
- as is the fact that the German chancellor is going to make a trip to the United states,
- as is the fact that techcrunch has just released a new blog-post)
Which brings us to today’s Groupon. The category is daily deals, they have infused the word ‘deal’ with specific meaning & characteristics much like google did with keywords.
A whole deal-centric ecosystem is forming and there will be multiple opportunities there. But deal verticals need to be careful, think of Amazon here as it moved out of books into different categories and created an Amazon marketplace. Groupon, LivingSocial and Gilt could become large Deal marketplaces like Amazon, eBay, etsy etc. Opportunistic players are going to find it hard to carve out separate verticals unless they have a unique niche.
As an exercise lets think of how StyleMint.com will evolve. StyleMint is a celebrity-endorsed commerce site recently launced by BeachMint.com. The tagline reads An exclusive t-shirt collection designed by Mary-Kate Olsen and Ashley Olsen.
To be succesful, besides its core competence i.e. celebrity-endorsements, t-shirt design it needs manufacturing, logistics, distribution, shipping. It needs an ecommerce platform, affiliate programs, online marketing, email lists and daily deals. It needs facebook, twitter integration, viral word-of-mouth and branding. All with a deal/shopping2.0 flavor
But since it is not a ‘regular’ ecommerce storefront it can’t use any of the services available such as the the Amazon marketplace, Big Commerce, ebay etc. It can use one of the new emerging storefronts i.e. payvment.com, shopify.com and the like but they are all emerging players and not yet established and feature-rich. So the deep-pocketed StyleMint builds out a unique platform.
However, during the 24 months that they are doing this, Groupon builds out a massive horizontal on daily deals with a huge userbase (70 million today - one can prorate it to about 300m in 24 months) and begins to start adding a ‘celebrity-endorsed’ daily deal add-on. 6 months later StyleMint decides to ‘partner’ with Groupon citing the ‘economies of scale’ in leveraging the superior technology & distribution & myriad other benefits that Groupon affords.
When the mop-up by Groupon of all verticals-of-interest begins to happen the leaders of the ancillary services that are being provided to the motley crew of home-grown verticals will stand to succeed in a big way.
What are those services. Deal re-sellers, Deal managers, Deal white label platforms, Deal ad-networks and other innovative ideas. In other words the deal ecosystem.
