Why Joost Failed, How Foursquare Succeeded, and Other Startup Lessons

http://thefastertimes.com/startups/2010/06/15/why-joost-failed-how-foursquare-surpassed-the-competition-and-other-lessons-for-startups/

by klous • 16 years ago

31 16 16 years ago

thefastertimes.com

tjsnyder• 16 years ago

The ability to completely readjust the direction of your startup is fundamental to a successful startup.

gleb• 16 years ago

Joost failure had nothing to do with technology. Instead they fundamentally misunderstood movie business and had a wrong business model. They did solve half of the problem, cost of bandwidth, but they failed to solve the much harder half -- upfront cost of content.

The story goes is that Joost came to studios with $40 mil to get rights to movies. They were told that that a prime movie rights were $10 mil prepay upfront, so they could choose 4 good movies, or a large library of junk. They chose junk, but neither option was viable.

To do business the way they wanted to, Joost was undercapitalized by a factor of 100.

YouTube and Hulu solved content problem differently. One through copyright infringement, the other though being owned by content owners.

pquerna• 16 years ago

Disclaimer: I worked at Joost.

To be fair, I think there were some mistakes in technology, but I agree 100% that your main point about content acquisition was the real nail in the coffin.

But using P2P, RDF, Proprietary Server Side Javascript, technology offices in 5 or 6 countries; These are all things that certainly didn't help.

Building on P2P part was built around the premiss that bandwidth would stay expensive, but it didn't. But at the same time, when Joost started, every premium content owner out there wanted realish DRM, so you still would of had a thick client. Later we actually switched to Flash and HTTPS, because bandwidth was cheap, and content owners stopped carrying nearly as much, but the problem of content acquisition still meant we had zero unique content.

dotBen• 16 years ago

I agree it was about content. In addition to gleb's comments the other issue they ran into is that TV licensing (on a program and channel basis) is all about exclusivity deals.

Joost couldn't license a TV series for distribution over IP because the producers always have exclusivity deals with networks in each geographic territory.

And whole networks, such as HBO, have exclusivity deal with just a small set of cable and satellite distributors.

It's really sad - delivery of shows over IP is exciting and the whole business is ripe for disruption but the broadcast media empire (the one that has the most to loose) is holding all the keys.

Oh and don't tell me Hulu is the answer. It's just the very same networks doing their own take, on their terms and at their pace of innovation. Hulu Plus: $10/month AND ads? C'mon, if only we had competition.

muhfuhkuh• 16 years ago

It wasn't just about content. That Joost client was not only something a) you had to install, but b) was your typical bloated, buggy, and horrid interface, and the delay going from one piece of content to another was grating.

Perhaps with all of these competing outlets for beaming and streaming content, there could be something of a "mechanical license" for rebroadcasting as they do in the music industry for song remakes. I mean, the content owners (I would think) want their work to be available on any medium willing to give them passive income and consumers obviously are willing to pay, either with money (iTunes) or time (Hulu).

Content owners obviously wouldn't like this for their current "big hits" and blockbuster content, but perhaps a clearinghouse like what Getty or istockphoto does to handle all the "back catalog" content would be something begging for a "technical solution" that a startup could do.

Use case: A person who wants to distribute/broadcast some back catalog content uses an automated system to negotiate and obtain the license for a master file (or one of several redistributable or streamable formats provided by the clearinghouse), then chooses the content. In that way, the creativity lies in the curating of content, and the content owner receives passive income on said content without pain of marketing. It's the resale of content.

Yeah, yeah, it'd never work with those jealously guarded movies and TV shows. But you never can tell, really.

grasshoper• 16 years ago

Joost was only launched in 2007, so what he is talking about Youtube surpassing them?

ecaradec• 16 years ago

It was on hackernews from cdixon blog a few days ago : http://news.ycombinator.com/item?id=1431531

ivankirigin• 16 years ago

Just post Chris's blog directly. Much cleaner: http://cdixon.org/2010/06/14/pivoting/

iamdave• 16 years ago

I kind of feel bad for Brightkite, getting left out of all this location based social networking talk, these days.

nerme• 16 years ago

Companies like FourSquare remind me of pop songs.

They're catchy, it's hard to describe exactly what makes them work, and if you're lucky, you'll write one your entire life.

What I don't get is why a "hit song" can be considered an entire company. Why is FourSquare trying to raise millions of dollars of investment money? Why not try and come up with another 7 or 8 products?

I mean seriously, what are they looking to become, the next Google? Do they have some sort of BadgeRank algorithm? The next Facebook? Are you going to be able to buy location based ads so you can direct people to your FanBadge pages so you can find out how many people like your Badges?

To me it seems like if investors, instead of investing in a gaming company, invested in just ONE game.

"Here you go, here's $20million, kid. Make sure that Warcraft keeps being the best game. Just keep adding to it, and adding to it, and adding to it, forever."

I'm hoping that FourSquare see themselves as a publisher of fun, little things, and try to develop new, even more fun, little things, and not become a big bloated "what the hell has this thing become" product.

Luc• 16 years ago

I know next to nothing about FourSquare, but it seems like you could make a pretty penny knowing the location of customers, and the businesses they regularly frequent. Coupons, loyalty cards, yellow pages (get paid for referring new customers), etc. It would be straightforward to implement technically, but you would need to have first-mover advantage and a sales force to get shops on-board...

whakojacko• 16 years ago

Foursquare makes a lot of sense from a business perspective-the data they are collecting is very valuable.

Why users would continually want to publish their location information is beyond me, but if 4Sq has figured out a way to game them to do so, more power to them.

code_duck• 16 years ago

Well, part of the reason that Joost failed is that when I tried to install it, the program didn't do much other than crash. I mean that literally, it didn't do anything other than crash. I never once saw Joost run successfully on my bland Vista install.

LargeWu• 16 years ago

Has Foursquare succeeded? From what I've heard, they aren't profitable, yet, which means to me that the jury is still out on them.

twalling• 16 years ago

Right. They succeeded in getting more funding. They haven't succeeded as a profitable company yet.

mikeryan• 16 years ago

I would consider Foursquare a successful "startup" but not yet a succesful "company". Twitter being the great grandpappy of startups I put in this group.

They have a loyal and relatively large user base and a lot of mind and market share. They also have a feature set that most of their competition is now trying to emulate. They seem to be headed in the right direction but their success as a "company" is still to be seen.

Also for perspective, I can't, off the top of my head, think of a mobile geolocation service that I would consider more successful then Foursquare. I could easily be missing something though.

Why Joost Failed, How Foursquare Succeeded, and Other Startup Lessons

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