The Vertical Particle Strategy.
You can go vertical by selling to your own backyard geographically and calling it a vertical search strategy :) Rather than indexing all the worlds billions of html pieces and websites, you can go vertical by file type - video, audio, spreadsheets. (even rss if u r like me:) Or content type eg blogs, podcasts... Similarly you can pick a Superwoman demo like Glam, Popsugar etc. (did i mention i worked at a 1.0 startup that focused affiliate sales of PCS/ISP/Financial Services to catholics and unionists ? :)
And you can especially go vertical by looking at the offline marketplace sizes (faves incl mortgages, new/used cars sold, insurance, health, telco, energy, industrial market segments etc) and determing how your (soon to be built or once your initial horizontal strategy fails as Brad alludes to) technology can take share. You can even go vertical by looking at google high grossing adwords and looking for arbitrage (the seo industry is really a vertical strategy), as the smart guys at quotify are doing locally.
Like Brad, I love the vertical market play done well - Ever since launching MSN's Carpoint downunder, when I got obsessed by cars and car specs (till one day I was doing a meeting under implied NDA with 2 X 65+ year olds from Adelaide who were taking a day off from their jobs to secretly meet with me because they wanted to aggregate all the car tyre specs and manufacturers, and were then going to charge tyre retailers a lead model "TyrePoint" they were to call it etc etc and I didnt think it was a bad strategy : I thought I've gotta get more horizontal for a bit !) To me any multi-billion market is inefficient and just waiting for a better solution.
Except you need to thread te needle, and build scale even though your explicit strategy is to go narrow. There is also a big difference between vertical markets on the consumer side (matching consumer demand with sellers) and the B2B side (interactions between wholesaler and the business facilitated by your amazing technology) Remember when B2B marketplaces would just take 1% of the transaction value :)
A Vertical Eco-System play done well like the StarHub one mentioned (in which the business takes 25% of tickets sold on the aftermarket they facilitate incl fulfillment) is most challenged by getting critical mass into their market. "Liquidity" as the MBA's call it. It helps to be first; To be number one; To have authentic community; Great product offering; Large marketing budget too.
As always though, non-derivative vertical strategies, you need to watch for ones that are a technology looking for a market need rather than the other way around. Kinda the person that turns up to the party and annoys everyone.
Feld.com Blog : "Vertical specialization is different. Service Magic took the notion of a generic buyer / seller marketplace and applied it to an ecosystem around home ownership (contractors first, then home buyers / real estate agents, and finally mortgage financing.) Stratify took a horizontal enterprise search technology that was awesome but difficult to sell (“hey Mr. CIO – do you want to buy some horizontal enterprise search?”) and applied it to the business of electronic discovery, building in awesome company in the process. Granted - you could say that each company went after vertical markets (which is an element of vertical specialization), but the key is that they took a horizontal technology and applied it very clearly to a vertical market and then built out a robust business around that, rather than customizing a generic application for a vertical market and then expanding into the next vertical market after they had some success."
Ryan McIntyre : "StubHub's success can be attributed to the power of vertical specialization. While eBay may have a lock on generic merchandise auctions and Google may own generic web search, these markets are so vast that there are often extremely rich verticals that can be better served by specialization, be it shopping search, travel search, ticket auctions, or other as-yet-unidentified verticals. When vertical specialization offers a sufficiently more compelling experience than the generic approach, real value can be built. The trick is figuring out which verticals are ripe for this type of mining. Clearly StubHub found a rich vein to mine."
And you can especially go vertical by looking at the offline marketplace sizes (faves incl mortgages, new/used cars sold, insurance, health, telco, energy, industrial market segments etc) and determing how your (soon to be built or once your initial horizontal strategy fails as Brad alludes to) technology can take share. You can even go vertical by looking at google high grossing adwords and looking for arbitrage (the seo industry is really a vertical strategy), as the smart guys at quotify are doing locally.
Like Brad, I love the vertical market play done well - Ever since launching MSN's Carpoint downunder, when I got obsessed by cars and car specs (till one day I was doing a meeting under implied NDA with 2 X 65+ year olds from Adelaide who were taking a day off from their jobs to secretly meet with me because they wanted to aggregate all the car tyre specs and manufacturers, and were then going to charge tyre retailers a lead model "TyrePoint" they were to call it etc etc and I didnt think it was a bad strategy : I thought I've gotta get more horizontal for a bit !) To me any multi-billion market is inefficient and just waiting for a better solution.
Except you need to thread te needle, and build scale even though your explicit strategy is to go narrow. There is also a big difference between vertical markets on the consumer side (matching consumer demand with sellers) and the B2B side (interactions between wholesaler and the business facilitated by your amazing technology) Remember when B2B marketplaces would just take 1% of the transaction value :)
A Vertical Eco-System play done well like the StarHub one mentioned (in which the business takes 25% of tickets sold on the aftermarket they facilitate incl fulfillment) is most challenged by getting critical mass into their market. "Liquidity" as the MBA's call it. It helps to be first; To be number one; To have authentic community; Great product offering; Large marketing budget too.
As always though, non-derivative vertical strategies, you need to watch for ones that are a technology looking for a market need rather than the other way around. Kinda the person that turns up to the party and annoys everyone.
Feld.com Blog : "Vertical specialization is different. Service Magic took the notion of a generic buyer / seller marketplace and applied it to an ecosystem around home ownership (contractors first, then home buyers / real estate agents, and finally mortgage financing.) Stratify took a horizontal enterprise search technology that was awesome but difficult to sell (“hey Mr. CIO – do you want to buy some horizontal enterprise search?”) and applied it to the business of electronic discovery, building in awesome company in the process. Granted - you could say that each company went after vertical markets (which is an element of vertical specialization), but the key is that they took a horizontal technology and applied it very clearly to a vertical market and then built out a robust business around that, rather than customizing a generic application for a vertical market and then expanding into the next vertical market after they had some success."
Ryan McIntyre : "StubHub's success can be attributed to the power of vertical specialization. While eBay may have a lock on generic merchandise auctions and Google may own generic web search, these markets are so vast that there are often extremely rich verticals that can be better served by specialization, be it shopping search, travel search, ticket auctions, or other as-yet-unidentified verticals. When vertical specialization offers a sufficiently more compelling experience than the generic approach, real value can be built. The trick is figuring out which verticals are ripe for this type of mining. Clearly StubHub found a rich vein to mine."
posted by redbarren at 6:23 PM
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