A few months ago I was speaking with Clive Gringas a partner from the city legal firm Olswang about the UK startup market. Having been a software developer in his past and now a commercial lawyer focusing on e-commerce, the Internet and IT, Clive has a unique insight. We began to discuss how different it was developing software today, mainly because of the simplicity of the development tools and the seemingly limitless opportunity to quickly create new companies by mashuping existing technologies.
Amongst the companies discussed, we highlighted OnOneMap, Zoomf, nestoria, TrustedPlaces, Reevoo and CrowdStorm and agreed it’s great to see all of these startups launched and doing so well but Clive also cautioned the over use and potential reliance on 3rd party technologies by some of these companies given they probably have an exit strategy to be bought by a larger player.
“What’s concerning; some investors is that mashed-sites are binding themselves too tightly into the 3rd party API’s. Due diligence by an investor may investigate a site’s architecture and code to ascertain how difficult it would be to remove one mashed element or API and then to substitute in another. You might ask why it is so important to be able to remove and substitute a mashed element if the integrated site is working well and bringing in revenues?One reason is to reduce the impact of the owner of particular API or mashed element going out of business. There is little risk of that, of course, when you mashup giants like Amazon, eBay, Google, Microsoft and Yahoo. But there are even risks when you work only with giants. If a Web 2.0 site is too tightly integrated with one particular giant’s API’s, the risk and cost of decoupling that code may scare off its potential purchasers, so closing down potential exits for the investors.“
One company that does use Google Maps today is nestoria but it seems they have already heeded Clive’s note of caution and are forming open source partnerships with some really interesting crowdsourcing projects. The first partnership is with geograph.org.uk who’s self-proclaimed mission is to “produce a freely accessible archive of educationally useful, geographically located photographs of the British Isles”. Another partnership is with openstreetmap “a project aimed squarely at creating and providing free geographic data such as street maps to anyone who wants them”. here is an example from the Isle of Wight.
Of course right now both of these projects are embryonic and the data they have is very sparse which means nestoria are still reliant on commercially licensed maps and data sources. It will be interesting to see what happens when VC investors start to do due diligence on them and if it effects their valuation one way or the other?
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Zoomf, another of the property search engines, has taken a slightly different angle and have decided to partner with a fellow startup called Trusted Places. Zoomf knows that the final decision to purchase a property is not solely about the price of the bricks & mortar, its also about the surrounding locality and its amenities. And yet just knowing that there is a school, pub and/or restaurant nearby your potential property purchase doesn’t tell you if they are good or bad. So instead of Zoomf trying to organically acquire this social knowledge themselves, they sensibly sought to partner with TrustedPlaces. This is a great win:win deal as TrustedPlaces extends the reach of their brand and possibly finds new reviewers via the Zoomf website. On the otherhand Zoomf enrichen their property search for their users by adding another layer of knowledge.
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I am sure there are many more similar partnerships taking place and we would love to hear about them. One I read about last night, has a more social rather than commercial aspect to their partnership with CrowdStorm forming a listening group on Last.fm which will sure beat listening to all of the crappy department store music – so long as it’s not Wham and last Christmas again.