

Why Joost Failed, How Foursquare Succeeded, and Other Startup Lessons - klous
http://thefastertimes.com/startups/2010/06/15/why-joost-failed-how-foursquare-surpassed-the-competition-and-other-lessons-for-startups/

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gleb
Joost failure had nothing to do with technology. Instead they fundamentally
misunderstood movie business and had a wrong business model. They did solve
half of the problem, cost of bandwidth, but they failed to solve the much
harder half -- upfront cost of content.

The story goes is that Joost came to studios with $40 mil to get rights to
movies. They were told that that a prime movie rights were $10 mil prepay
upfront, so they could choose 4 good movies, or a large library of junk. They
chose junk, but neither option was viable.

To do business the way they wanted to, Joost was undercapitalized by a factor
of 100.

YouTube and Hulu solved content problem differently. One through copyright
infringement, the other though being owned by content owners.

~~~
dotBen
I agree it was about content. In addition to gleb's comments the other issue
they ran into is that TV licensing (on a program and channel basis) is all
about exclusivity deals.

Joost couldn't license a TV series for distribution over IP because the
producers always have exclusivity deals with networks in each geographic
territory.

And whole networks, such as HBO, have exclusivity deal with just a small set
of cable and satellite distributors.

It's really sad - delivery of shows over IP is exciting and the whole business
is ripe for disruption but the broadcast media empire (the one that has the
most to loose) is holding all the keys.

Oh and don't tell me Hulu is the answer. It's just the very same networks
doing their own take, on their terms and at their pace of innovation. Hulu
Plus: $10/month AND ads? C'mon, if only we had competition.

~~~
muhfuhkuh
It wasn't just about content. That Joost client was not only something a) you
had to install, but b) was your typical bloated, buggy, and horrid interface,
and the delay going from one piece of content to another was grating.

Perhaps with all of these competing outlets for beaming and streaming content,
there could be something of a "mechanical license" for rebroadcasting as they
do in the music industry for song remakes. I mean, the content owners (I would
think) want their work to be available on any medium willing to give them
passive income and consumers obviously are willing to pay, either with money
(iTunes) or time (Hulu).

Content owners obviously wouldn't like this for their current "big hits" and
blockbuster content, but perhaps a clearinghouse like what Getty or
istockphoto does to handle all the "back catalog" content would be something
begging for a "technical solution" that a startup could do.

Use case: A person who wants to distribute/broadcast some back catalog content
uses an automated system to negotiate and obtain the license for a master file
(or one of several redistributable or streamable formats provided by the
clearinghouse), then chooses the content. In that way, the creativity lies in
the curating of content, and the content owner receives passive income on said
content without pain of marketing. It's the resale of content.

Yeah, yeah, it'd never work with those jealously guarded movies and TV shows.
But you never can tell, really.

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nerme
Companies like FourSquare remind me of pop songs.

They're catchy, it's hard to describe exactly what makes them work, and if
you're lucky, you'll write one your entire life.

What I don't get is why a "hit song" can be considered an entire company. Why
is FourSquare trying to raise millions of dollars of investment money? Why not
try and come up with another 7 or 8 products?

I mean seriously, what are they looking to become, the next Google? Do they
have some sort of BadgeRank algorithm? The next Facebook? Are you going to be
able to buy location based ads so you can direct people to your FanBadge pages
so you can find out how many people like your Badges?

To me it seems like if investors, instead of investing in a gaming company,
invested in just ONE game.

"Here you go, here's $20million, kid. Make sure that Warcraft keeps being the
best game. Just keep adding to it, and adding to it, and adding to it,
forever."

I'm hoping that FourSquare see themselves as a publisher of fun, little
things, and try to develop new, even more fun, little things, and not become a
big bloated "what the hell has this thing become" product.

~~~
Luc
I know next to nothing about FourSquare, but it seems like you could make a
pretty penny knowing the location of customers, and the businesses they
regularly frequent. Coupons, loyalty cards, yellow pages (get paid for
referring new customers), etc. It would be straightforward to implement
technically, but you would need to have first-mover advantage and a sales
force to get shops on-board...

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LargeWu
Has Foursquare succeeded? From what I've heard, they aren't profitable, yet,
which means to me that the jury is still out on them.

~~~
mikeryan
I would consider Foursquare a successful "startup" but not yet a succesful
"company". Twitter being the great grandpappy of startups I put in this group.

They have a loyal and relatively large user base and a lot of mind and market
share. They also have a feature set that most of their competition is now
trying to emulate. They seem to be headed in the right direction but their
success as a "company" is still to be seen.

Also for perspective, I can't, off the top of my head, think of a mobile
geolocation service that I would consider more successful then Foursquare. I
could easily be missing something though.

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ivankirigin
Just post Chris's blog directly. Much cleaner:
<http://cdixon.org/2010/06/14/pivoting/>

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ecaradec
It was on hackernews from cdixon blog a few days ago :
<http://news.ycombinator.com/item?id=1431531>

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iamdave
I kind of feel bad for Brightkite, getting left out of all this location based
social networking talk, these days.

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code_duck
Well, part of the reason that Joost failed is that when I tried to install it,
the program didn't do much other than crash. I mean that literally, it didn't
do anything other than crash. I never once saw Joost run successfully on my
bland Vista install.

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tjsnyder
The ability to completely readjust the direction of your startup is
fundamental to a successful startup.

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grasshoper
Joost was only launched in 2007, so what he is talking about Youtube
surpassing them?

