💡 The Idea
- Here's a common pattern: a big company acquires a popular service only to shut it down shortly afterward.
- Big companies place many small bets and naturally, most of them simply don't work out.
- But only because it doesn't make sense for a big company to continue operating a service, doesn't mean there's no demand for it or some other fatal flaw.
- A bet needs to succeed in a spectacular way to be considered a success for a companies with billions in yearly revenue.
- A business that plateaus at, say, $200k yearly revenue certainly does not move the needle for Google or Amazon.
- Similarly, many VC-funded startups get shut down simply because they did not grow fast enough.
- Many of these businesses that get shut down could be healthy "lifestyle" businesses.
- As the saying goes: one man's trash is another man's treasure.
- Side note: if you ever wondered why so many startups within big companies fail, read this case study.
- Delicious was a social bookmarking web service for storing, sharing, and discovering web bookmarks.
- In 2005 it was acquired by Yahoo for somewhere between $15 million and $30 million.
- 2010 an internal slide from a Yahoo meeting leaked, indicating that Delicious would be "sunsetted", i.e. would be shut down.
- Naturally, this news resulted in Delicious users looking for alternative sites to store and organize their bookmarks.
- While Delicious had no strategic value to a big company like Yahoo, a robust social bookmarking web service could very much make for a profitable lifestyle business.
- This was proven by Maciej Cegłowski who with Pinboard perfectly filled the gap left by Delicious.
- The service has plateaued around $200k in yearly revenue.
- So while this number is obviously merely a splash in the ocean for a company like Yahoo, it is more than enough to pay for Maciej's living expenses.
- A fun sidenote in this story is that Pinboard eventually acquired Delicious for $35,000.
- Amazon just announced that they will shut down Alexa (the research tool, not the virtual assistant) on May 1, 2022.
- Alexa was acquired by Amazon in 1999 for $250 million in stock, three years after it was founded.
- For the past two decades it was one of the go-to resources for content research, competitive analysis, and keyword research.
- The Alexa Rank is one of the first metrics people look at to understand how much traffic a site is getting.
- So unsurprisingly many users reacted with "WTF! Why?", followed by the question "Is there an alternative?".
- Interestingly, Amazon didn't share any reason why they suddenly decided to shut down the service.
- According to Alexa, Alexa is still a top-5000 site, so demand definitely is not an issue.
- An affordable service that provides reliable traffic estimates (while far from easy to build) seems like a great opportunity right now.
- Initially, Alexa calculated their estimates by monitoring the traffic of users of the Alexa toolbar and then extrapolated from there.
- Later, as fewer people used the toolbar, they moved on to more broad data sources like purchasing data from ISPs.
- Alexa's main competitor is Similar Web which, however, is far less accessible ("Talk to a product expert") and also has a much, much smaller index.
- In 2020 Kenneth Cassel made over $27,000 from his interactive vim course.
- He then had the idea to make the technology he built for the course available to other course creators.
- The result was a course marketplace called Slip that makes it easy to build and sell interactive programming courses.
- In the first month since launching, over 1300 developers signed up to be course creators.
- With these strong signs of traction, he was accepted in the Y Combinator S21 batch.
- It surprised everyone when he announced this week that he's sunsetting Slip.
- The reason is that Kenneth now wants to build a web3 company. (The short-term plan is to offer "free interactive web3 tutorials with crypto rewards, like NFT's and cryptocurrencies themselves".)
- Given the reactions to his announcement, it seems safe to assume that Slip was doing good. (In his own words: "Sometimes you gotta trade a good opportunity for a great one.")
- However, good is not good enough for a venture-backed company.
- The moment he got accepted into YC his vision had to change from lifestyle business to something much larger.
- So while the original vision for Slip was not a good fit for the venture capital playbook, it seems likely that it would make sense for a lifestyle business.
- To find dozens of similar opportunities, simply head over to Google News and search for phrases like "is shutting down" or "is sunsetting".
- For example, Reddit is shutting down Dubsmash, a social video-sharing app that's still downloaded 80,000 times per month according to Sensortower.
- Another example: Epic recently shut down Houseparty after paying $35 million for it in 2019.
- The Graveyard that Nico Cerdeira curates at Failory is also a goldmine.
- As illustrated by Kenneth Cassel's story outlined above, it can also make sense to look at the pivots by YC startups.
- Venture-backed startups and startups acquired by big companies must fit a very narrow set of criteria that leave lots of gold behind for savvy bootstrappers.
I hope you enjoyed this report. If you have a minute, please respond and let me know what you think.
Please do share with your friends. I spent 5+ hours on this so it would be nice if a few people read it.
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