Tribble Traffic
Do you remember tribbles? They are the cute little purring fur balls Captain Kirk and his crew encountered in the Star Trek episode "The Trouble with Tribbles." It seems the rascally space trader Cyrano Jones thinks they are a gold mine. They multiply at a prodigious rate with little cost, since they eat almost anything. So he can produce them in vast quantities on the cheap. They are adorable, so everyone will want one. He's gonna be rich!
Uhura takes one to the Enterprise. Soon they overrun the ship. It seems they are born pregnant and reproduce asexually. And rapidly. Cute wears off fast when these fluff balls start filling every nook and cranny of the ship. Scotty finally has to beam them all into space to get rid of them.
Tribbles are, I fear, a lot like the traffic many of the new crop of Internet companies attract. Just because traffic may be cute, cheap to attract and create a nice buzz, it does not mean it is worth anything. This is tribble traffic.
When the entrepreneurs who build these companies finally figure out how to monetize their ideas, they often find they are trapped by tribble traffic. They discover that they can build a viable business model around only a subset of their users. The problem is that they cannot just beam the rest of the traffic into space. They cannot segment the valued traffic without alienating most all of their users. They similarly cannot capture enough demographic information to segment their traffic for advertisers without user rebellion. The tribble traffic is increasingly costly to serve due to diseconomies of scale. They must often finally sell to a big, well established concern, which can afford to dump the tribbles, reframe the proven concept and reap its value.
Tribble traffic is one root cause of The Three Curses of Internet Success. One reader described the outcome of this as "bigger companies using these small companies in place of in-house R&D." I agree. These Startups in Wonderland are becoming the experimental labs for established companies.
While Internet entrepreneurs should not be compared to that scoundrel Cyrano Jones, they should be aware of the trouble with tribbles.
Copyright © 2006 Philip Bookman
Uhura takes one to the Enterprise. Soon they overrun the ship. It seems they are born pregnant and reproduce asexually. And rapidly. Cute wears off fast when these fluff balls start filling every nook and cranny of the ship. Scotty finally has to beam them all into space to get rid of them.
Tribbles are, I fear, a lot like the traffic many of the new crop of Internet companies attract. Just because traffic may be cute, cheap to attract and create a nice buzz, it does not mean it is worth anything. This is tribble traffic.
When the entrepreneurs who build these companies finally figure out how to monetize their ideas, they often find they are trapped by tribble traffic. They discover that they can build a viable business model around only a subset of their users. The problem is that they cannot just beam the rest of the traffic into space. They cannot segment the valued traffic without alienating most all of their users. They similarly cannot capture enough demographic information to segment their traffic for advertisers without user rebellion. The tribble traffic is increasingly costly to serve due to diseconomies of scale. They must often finally sell to a big, well established concern, which can afford to dump the tribbles, reframe the proven concept and reap its value.
Tribble traffic is one root cause of The Three Curses of Internet Success. One reader described the outcome of this as "bigger companies using these small companies in place of in-house R&D." I agree. These Startups in Wonderland are becoming the experimental labs for established companies.
While Internet entrepreneurs should not be compared to that scoundrel Cyrano Jones, they should be aware of the trouble with tribbles.
Copyright © 2006 Philip Bookman
Labels: software strategy
posted by Phil Bookman at 10:10 AM
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