Hindsight 2.0, Lessons from a Failed Web 2.0 startup

Dharmesh Shah and Brian Halligan wrote a very interesting blog entitled "Hindsight 2.0. Lessons from a Failed Web 2.0 Startup". The post is about Kiko, a once highly touted startup building a web 2.0 on line calendar. They had lots of buzz, VC money from Paul Graham, built with AJAX, and were considered cool. They are now up for sale on eBay...starting bid $50K.

I don't know the specifics of Kiko, but I do know that the calendar space is hard to crack. It is not about the technology...that is relatively simple. It is about existing calendars being entrenched in Microsoft Outlook, Lotus Notes, and to some degree Blackberry.

Calendars are a feature, not a company. Not only are calendars just a feature, but they have only been successful when integrated with your email/communication system. I don't know of a single calendar product that is successful on a stand alone basis. Even mighty Google has failed, with all its brand, money, and engineering prowess, in terms of market share, its calendar product is a failure. Kiko didn't stand a chance.

There are other companies doing on line calendars but the problem is always which calendar will be the primary consolidator of all entries, work, personal, or shared? Each calendar company wants to be the controlling or consolidating point. For most users they will not agree to give up their Outlook or Notes calendar, so it is a non starter.

This is why Ray Ozzie invented Simple Sharing Extensions (SSE), an extension to RSS. The idea behind Simple Sharing Extensions is to allow multi-directional synchronization of data and objects across multiple applications. Ray used the example of trying to synchronize his private/shared/public calendars with those of his wife. They used different tools and wanted to share pieces (but not all) of each calendar, and contacts, with each other, and associates.

SSE can help solve the calendar synching problem without requiring the user to choose a primary controlling calendar. Microsoft Outlook Calendar users can continue to use the Outlook Calendar for work, add personal events, and share selected calendar entries with other people. No one wants the hassle of maintaining separate calendars for work, personal, and shared items, and use different systems to do it.

An on line calendar does not solve the problem of sharing selected items with friends, or synching your work calendar on multiple devices, phones, etc. Web 2.0 or not, it was doomed to failure. Kiko is out of business and Google's calendar is a forgotten novelty.

There are lots of Web 2.0 failure stories but most of them are never told. They simply fade away, and with them, the lessons that could prevent another wave of bubble failures.

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Comments

[Anil]

I agree with your analysis. But there is another reason that most people seem to forget: concentrating on the wrong users.

If web 2.0 companies see the nerdy/geeky users as their beachead, then they are bound to fail if Google launches a similar product. But if they pick another niche demographic, they might win the battle - the perfect example is YouTube (teens) and My Space(music lovers and now of course teens). These are demographics that dont intersect with Google’s non search services.

Startups please go after these niche demographics rather than the Silicon Valley nerds or as Josh Kopelman calls them 53,651 techcrunch users.

[Ben Fulton]

I agree with Anil. Like Dvorak said, combine a pent-up demand with an application that's easy enough to use and you might have a winner. I bet there's a pent-up demand for online calendaring.

http://www.marketwatch.com/news/story/story.aspx?guid=%7B29399E0D-DBFD-4DA3-BB53-1E09BAD7F66B%7D

[Narendra]

Don,

I disagree with a lot of what you are saying. Web2.0 companies that fail do so in a climate of exaggerated expectations and rampant speculation.

The critical factor of all software (and Microsoft knows this well) is distribution. Outlook is king because of its distribution. The calendar for Hotmail will have many millions more users than Google's calendar because of distribution.

At 30 Boxes, we are trying to tackle the same communication questions that Microsoft was looking at more than a decade ago only now with a fresh approach and with an eye for the social aspect of the web.

50% of people have never used a calendar or organizational system on a computer. My guess is that the benefits are not clear and the pain is significantly higher than writing something down on a month view on the refridgerator.

In many ways MySpace has replaced Outlook as a communication vehicle because of an intolerance for unsolicited email.

The shift will be non-obvious, it may make use of SSE (but Microsoft has a clear conflict of interest), but in general it will look, feel, and act quite differently.

When an application lets me know what I am doing (and might do) and what my friends are doing and lets me communicate passively and actively. Well, that's more of a portal, and there is a business there.

[Donovan]

I personally enjoy having a calendar seperate from my email, because my email, even with spam filters, has become close to useless. I only use Outlook for email, and I use email as little as possible. I use Groove and Skype and our own products, GForce.CRM and Team Calendar Manager for most communication and calendaring. I also use Google calendars. It's difficult to share information from Outlook and it's a pain to write applications that integrate with Outlook because of the security issues and warnings Outlook always pops up. I do agree with your assesment of SSE, but I hope it leads to the demise of calendar in Outlook being required.

[Don Dodge]

Thanks for all your comments. Anil, I agree that focusing on the geek/nerd/blogger problems does probably not represent a large enough market to be viable. However, Kiko was focused on a generic calendar that anyone could use. Calendars have been around forever and the technology is fairly simple. The remaining problems are sharing calendar objects with friends, and synching your calendar with all you other computers and phones. Kiko didn't address those problems.

Ben, I completely agree with you and Dvorak about pent-up demand and solving real problems with simple, elegant solutions. I thik his article was about YouTube. It made me think of my time at Napster. File sharing existed before Napster but it was difficult and geeky. Napster made it so simple my grandmother could do it. web 2.0 companies that provide simple intuitive solutions will be successful.

[Don Dodge]

Narendra, I appreciate your comments but you make a circular argument that doesn't hold up.

Web 2.0 companies, or any company for that matter, do not fail because of high expectations. They fail because they run out of money. They run out of money because they don't have a viable business model, or because customers are simply not willing to pay for the "solution" they provide.

Distribution is not the issue either. I have seen companies with millions of beta users ultimately fail fr the above reasons. Google has huge distribution, brand recognition, incredible PR buzz for anything they do, and billions of dollars in cash...and they still can't get significant market share even if they give it away for free. Doesn't that tell you something?

BTW, Microsoft provides SSE free under the Creative Commons open source license. So, I don't see how Microsoft has any conflict of interest.

I do agree that there are different usage models and business models that could make a calendar interesting as part of a larger solution. So far, no one has done that, and it will take several tries to get it right.

Good luck to you and 30 Boxes. I am always cheering on startups and wishing them success. I sincerely hope you make it.

[Don Dodge]

Donovan, I am happy to hear you are using Groove Workspaces. As you may know, I was VP of product management at Groove for several years. I agree Groove is great for team collaboration and projects. Groove keeps all communications, files, calendar and project management organized by project and synchronized with all users. It is a great product, and it does eliminate spam issues.

If you can stay laser focused on specific projects and only those teams than Groove, Gforce, and Skype are great tools. The problem is that most people need to interact with hundreds of people outside their team or organization on ad hoc issues and questions.

The reality is that 90% of all people use email (and its calendar) as the universal communication and planning tool. It is generic, intuitive, and easy to use.

How many people use Excel spreadsheets instead of a database because it is easier to use? How many use Excel instead of Microsoft Project because it is easier to use?

Web 2.0 companies will be successful if they deliver solutions to real problems, that are simple, intuitive, and offer immediate productivity. Again, the beauty of Napster and YouTube is that they made hard technical problems so simple that anyone could do it. User Interface design is critically important.

[Narendra]

Don,

A couple of clarifications:

I said they are failing in our current climate of "expectations" which is magnified by the blogosphere. They were born and have now died within the same marketing storm. Though now, I would argue you could blame that failure on "expectations" because they have admitted to being tempted by the "built to flip" model.

Obviously you need a great product and a revenue model to have a viable business.

Distribution is a finicky thing and though Google is big, it has been pretty clear from the start that people go there to search and not to find ancillary products or download software.

Microsoft is about users using Microsoft products. SSE is a nice gesture but more of a nod to their comfortable market position.

Using 30Boxes as part of my organizational scheme I tag entries in any number of ways (work, personal, sports, friends) and then I am free to syndicate out those events to anyone (heck I can broadcast one segment on a blog) I like with granularity. When I leave my house, I pull up my calendar, to do items, and buddy updates on my mobile phone.

Oh, and the calendar "industry" has been around for a long time. Someone will get it right online at some point.

Thanks for the encouragement!

[Andre]

I've avoided association of my Micro-ISV product with Web 2.0. Web 2.0 means so many things to so many people that it loses its meaning. Throw in the O'Reilly trademark issues and you have a real headache. My product, ListRing (http://listring.com) provides peer collaboration and knowledge sharing, built-in RSS support, and will soon support OPML and Podcasting. The biggest selling point of the latest web apps is the empowerment of end users to share information and create content, what I have seen referred to as the 'Interactions Web'. Maybe this is the term we should start using. The bottom line is that individuals using these applications, for personal and business use, will be able to share knowledge much more efficiently.

[Lloyd D Budd]

Don, instead of "Even mighty Google has failed, [....] in terms of market share [....]"
it would be great to an estimate on the market share or at least a link. You know, a measurement. Overwise, your assertion is meanless.

I think saying "Google's Calendar is a forgotten novelty" is wishful thinking on your part. I seems like a necessary part of the gmail offering. Unlike Kiko, Google needs very little market share for their calendar to be measured as a success.

Kiko entered the market (before Google) when there was a pend up demand for good online calendaring. Enough demand? I don't know, but very, very unlikely for an organization to have an innovation that could keep off the "fast followers" with their portfolio of products that create the whole productivity equation.

[Don Dodge]

Lloyd, Here is a link to marketshare analysis by HitWise. http://weblogs.hitwise.com/bill-tancer/2006/05/google_yahoo_and_msn_property.html

HitWise says that Gmail has just 2.54% of the email market compared to 42.4% for YahooMail and 22.9% for MSN Mail.

This isn't Microsoft Outlook email...it is MSN web email numbers they are comparing Gmail to. No Windows distribution advantage for MSN Mail, this is comparing web app to web app.

The numbers for Google Calendar are worse...far worse.

I wrote a blog on July 1,2006 entitled "Google a one trick pony?" that goes into more detail on market share numbers for the various Google products. In a word they awful. But, I said in the post, it is early in the game. Google will improve these products, and some of them may win larger market shares. Time will tell.

I don't think Google Calendar killed Kiko. Google Calendar is so tiny it barely shows up in the market share numbers.

Kiko failed because they didn't have paying customers or advertisers to support them. It is really that simple.

[Don Dodge]

Andre, I took a quick look at ListRing. Pretty cool web collaboration app. As you know I was at Groove Networks for several years so collaboration is near and dear to me. However, it is a tough market to crack. Email is the collaboration tool of choice for most people...even though other tools are better.

There is definitely a place in the market for an easy to use web collaboration tool. I hope interested users will check out ListRing.

[Lloyd D Budd]

Thank you for the numbers that you based your post on.

So tiny? Even Google's small percentage is a huge number.

I don't think Google Calendar killed Kiko either, but Paul Graham and the Kiko people seem to.
http://paulgraham.infogami.com/blog/kiko