If your entire business is based on searching another company's already searchable set of data by using the apparently ingenious method of prepending a "$" to search terms, and you've raised $8.6 million knowing full well that at any time said company who owns this data could implement such a trivial feature, then you're taking a stupidly ridiculous risk.
You can turn your feature/plugin into a company, but more than most startups, you should be incredibly wary of the prospects of those you're piggy-backing to duplicate your product. I had similar criticisms for Rapportive – Google could've "hijacked" their idea at any time. They made it out nicely, but the odds were really, really slim, and still are for anyone wanting to do the same.
I'm not saying don't go for it; just don't be surprised if and when your idea is copied.
Nitpick: when you're raising $8.6M you're not taking a ridiculous risk, your investors are. Arguably you then have less risk, e.g. you can reliably draw a salary for several years even if your company isn't yet profitable.
Yea, there are a lot of companies, pre sellout or pre IPO that will run for year and years without a profitable business model. To name one off the top of my head... Twitter.
That's the problem with most of API apps of twitter. Twitter is a simple system. And if your are implementing a feature over Twitter via their api you are very vulnerable to this. Anytime twitter could implement this feature. Because you most probably have a user base of "small subset of Twitter's", you will have a great problem after all the users have access to this feature. This will make you the second competitor for the feature and move Twitter to leadership for it.
So building features over somebody else's API is a bad move. You have to build a business which is not solely based over a nifty feature you have implemented over somebody's API which could be hijacked in no time. Implementing features are easy, building businesses are hard and time consuming.
Not only was his business built on top of the Twitter API, but his "key feature" was merely semantics. I'm not even convinced he should get the credit for originality, Stowe Boyd published an article on the topic in July of 2009 [1].
Companies that rely wholly on a third-party API aren't sustainable businesses, they're hobbies and oddly they have become overfunded hobbies. Twitter's starting to put a lot of hobby-companies out of business.
Companies that rely on a third-party API that they isn't contracted and paid for aren't sustainable.... if it's free, it can be taken away.
Unless I'm missing something and he was paying twitter for this.....
"Filling little gaps in another company’s product lineup is snatching nickels from the path of an oncoming steam roller."
He also has a good Dave Winer quote:
Dave Winer (in 2007): "Sometimes developers choose a niche that’s either directly in the path of the vendor, or even worse, on the roadmap of the vendor. In those cases, they don’t really deserve our sympathy."
Real enough to raise several millions multiple times, hire a medium sized team (22 according to CrunchBase), and be featured in multiple prestigious publications like TIME, Bloomberg TV and Fast Company at least.
And to be fair - this "cashtag" isn't the product StockTwits, it's just a feature of it (albeit an important one).
That doesn't mean it's a real business at all. It could be a sign of over hype, over valuation, and just foolishness. I mean, the proof is in the pudding here. I guess there was very little risk management done here. Joel Spolsky wrote about not making this mistake awhile back, though I have "google block" and can't seeM
to find it (maybe it was on a podcast).
Well if they "raised money" then when Investors asked them the question along the lines of "Who are your competitors, and who might become competitors? Who do you fear most?" StockTwits should have clearly seen this coming.
I wrote a similar app called TwitSkills which used Twitter to post and search job skills and even I knew that Twitter could steal my idea in the blink of an eye.
Interestingly, I was the one who lobbied Twitter (more specifically Matt Sanford of the search team) to make '$' a valid stop character for searching on summize/twitter search. You've been able to search $TICKER for 2-3 years now. The only thing Twitter has done now is linkified them like hashtags, and they only link to a twitter search of that ticker... so nothing really interesting yet.
My problem was Twitter's API not having a more intelligent filter API. If you want to use it to filter all tweets with stocks (i.e. "\$\w{1,4}") you can't as far as I could tell. Instead you have to filter on '$' which gets you a ton of noise ("got me some $$$ for 2NITE! yeah!!!!").
... Which you could them pull into a database and filter with your Regex after the API. What does the noise cost you? It's a solvable problem. true, the expanded results may keep you from getting relevant tweets due to rate limiting.
But that is the point, you get rate limited. Of course you can take the data set and clean it in your own database. The problem is how much relevant data you can get before getting cut off.
Once again I say "don't bet the farm on the generosity of someone else." People frequently cry when these services pull support, "steal" ideas (I use steal loosely), or block access...
Would you build your kids playhouse on your neighbors yard just because he doesn't say no?
You would think so, but apparently not, since (if CrunchBase is accurate) StockTwits has raised $8.6 million in venture funding over four rounds: http://www.crunchbase.com/company/stocktwits
So either the VCs didn't ask the question, or they did ask it but didn't think too hard about the answer they got.
Some VC's are excellent because they ask the right questions. Once they join they are a member of your team and will go out of their way to make it a successful venture...
Sometimes the VC's are tools. They will fight to own the biggest stake possible. Once they join, they just sit on the board while they twiddle their thumbs and wish they were playing golf instead.
Lots of critique on the post itself (most of which I agree with), but as others have mentioned, Stocktwits has a real business - they sell compliance-friendly social network tools to public companies - apparently about 150 of them for $1500/month. That's about $2.7m in revenue if those numbers are correct. They also have PRO accounts for $500/month - no idea the number of accounts. Obviously the numbers could be bullshit, but I've seen a fair number of Fortune 500 companies (Shell Oil, etc) using their service.
It's been a while since I looked at their site/tools, but I thought built their own Twitter that runs alongside Twitter, although I'd be curious what percentage of posts end up on Stocktwits network vs. Twitter. If that is still the case, clearly they were concerned about being overly dependent on Twitter.
My point is just that the $ isn't the business - and honestly, I don't see why this does anything but make their lives actually easier. That's my main complaint - what does this change for Howard? Maybe it makes it easier for a competitor to build something similar, but what was really stopping them in any case? Couldn't a competitor have just adopted the same methodology?
No connection to the company - just thought the info might be useful.
Howard does sound like he is complaining, not sure why. I had heard him talk at event where he did say they built their own platform independent of Twitter.
That's not the worst thing about the post if we're going to be pedantic about grammar. :) For example, he said "does mean" where he presumably intended to say the opposite, "doesn't mean". Also, "Lot's of pressures" shouldn't have the apostrophe.
While I can sympathise to a certain extent, the ignorance of the StockTwits founder makes it hard to completely sympathise for honestly thinking that a company wouldn't take a money making idea using its platform and bake it in to the service. It's the same problem people complain of in the Apple app store, numerous times developers have cried foul over Apple stealing their idea for themselves.
I definitely agree it's not ideal and will stifle innovation, but when you're as big as Twitter or Apple you can afford to lose a few developers using your platform without any recourse.
I think the difference with Apple is that developers are not piggy bagging on Apple's infrastructure, but provide new kinds of services that Apple hasn't thought of. Then when these services prove to be popular Apple implements similar feature and uses the notorious clause in their contract prohibiting replication of native functionality. This approach is much more dirty.
Not sure why he's angry, didn't this same thing happen with Instapaper and Apple? If anything, it will expose the idea to countless others and if they really like it they might want to go beyond Twitter's implementation of it, unless the feature is so weak / easy to do that you shouldn't be relying on it.
Searching StockTwits for '$WAG' results in relevant tweets about Walgreen Co. [1], whereas searching Twitter for '$WAG' results in tweets containing '$wag' in place of 'swag' [2].
Then what is he complaining about? It looks like his "product" has just as much opportunity as it did before, just the $links are now a different color by default, no?
Lots of derision over how easy it was for StockTwits to build this and as such they don't deserve sympathy? I don't get it. It sucks for them that Twitter is implementing this feature, but I have to say that I have respect for StockTwits - they noticed a gap in a market, produced a product and got on with building their business. That's what we should all be doing. I think the real/productive questions here are "what can StockTwits do to leverage their current user base so that they continue to provide a valuable product and keep building?" or "what is the best pivot they could do to keep building their business?"
This is just a case of a bad business person failing to protect themselves. If the idea is that revolutionary and important to your business, then get several patents on the idea and then be ready to defend those patents against everyone.
This is why I'm not a fan of API's to begin with. It's just a proving ground for the company hosting the API to troll the best ideas.
You can turn your feature/plugin into a company, but more than most startups, you should be incredibly wary of the prospects of those you're piggy-backing to duplicate your product. I had similar criticisms for Rapportive – Google could've "hijacked" their idea at any time. They made it out nicely, but the odds were really, really slim, and still are for anyone wanting to do the same.
I'm not saying don't go for it; just don't be surprised if and when your idea is copied.