Is collaboration the future business model for web startups?

Business July 29, 2011 1 Comment

Foursquare and Groupon have just announced a partnership that will see daily deals appear in the Foursquare app. It represents a huge opportunity for both brands and a real chance to take on Facebook as they suffered a blow when Facebook launched both location and deals services. Foursquare certainly stands to gain more from this partnership, as they have remained a niche offering up until now, with a minimal following outside the U.S. As a service on its own, this is a valuable offering for consumers. And in the huge rush of web startups that we have today, it shows that perhaps collaboration is the road to success – combining knowledge, users and services to offer something completely different and ultimately more valuable to the end user.

Strength in numbers

The fact is that so many web and mobile companies are springing up, and all this fragmentation often leads to failed startups. Launching a product is one thing, launching a successful business is quite another. By partnering up, whether this is an actual merger or joining services in an experimental campaign, smaller startups can strengthen their positioning and successfully consolidate their services. The rate of new businesses in the social/mobile/location space is staggering, but it is only sustainable for so long. With so many services competing against each other, maybe it’s time to admit that you can’t necessarily do it better on your own and that there could be the perfect partner out there that can gain you important traffic and users away from the bigger players.

Partner up before it’s too late

Another strong indication that collaboration is the key to success, for young social startups, is perhaps the uncertainty of the social market. As the Facebook investor and rock musician Roger McNamee recently proclaimed – social is done. More specifically, he warns people not to go to a social startup. Now this might be a fairly dramatic and premature speculation, but it points to the fact of why we have so many failed social startups. It is a fresh and uncertain market, and rather than thousands of companies diversifying and trying to carve their own niche and develop their own products, by combining knowledge between companies, the market itself will strengthen, along with the individual business value. Do I necessarily agree with Roger here? Not really. I don’t believe that social is done but I do believe that it’s a risky area for startups and why your time may be better spent in partnerships. Throw the ego out the window and look for opportunities to join up and offer something better than you could on your own.

Foodspotting – proving the case

An excellent example of a young hot startup partnering up strategically is Foodspotting. They are a good success story in the app market, standing out amongst hundreds of competitors, thanks in part to the collaborations they’ve explored. They started in 2010 by partnering up with the restaurant rating app Zagat. The move saw Foodspotting’s data brought into Zagat, via the Foodspotting API. This shows an open approach by Foodspotting, as they recognised the strength in making their data openly available to others and building out their following through similar services, as opposed to a closed approach. They furthered this success when they recently partnered with Single Platform. The service offers users information about hotels and restaurants based on information gathered directly from the establishments themselves and distributed through publishing partners. The collaboration works both ways, as it brings Foodspotting’s user generated content into Single Platform, while Single Platform feeds (ahem) the foodspotting app with information such as restaurant opening hours, that can’t necessarily be generated by users. While these partnerships are not the only reason for the success of Foodspotting, it shows the good business practice being exercised by the company, significantly strengthening what is still a new app business.

Tags