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Startups Case Study ALLTOPSTARTUPS.COM STARTUPS CASE STUDY Compiled By Thomas Oppong | Content courtesy of Startup-review.com 2 Introduction............................................................................................................................................................ 3 Facebook.com ........................................................................................................................................................ 4 Advertising.com ..................................................................................................................................................... 9 Betfair.com .......................................................................................................................................................... 12 Craigslist.org ........................................................................................................................................................ 16 Digg.com ............................................................................................................................................................. 20 eCrush.com .......................................................................................................................................................... 25 eHarmony.com ..................................................................................................................................................... 29 Flektor.com .......................................................................................................................................................... 34 Flickr.com ............................................................................................................................................................ 36 Greenfield.com ..................................................................................................................................................... 38 Grouper.com ........................................................................................................................................................ 42 Homegain.com ..................................................................................................................................................... 46 HotJobs ................................................................................................................................................................ 50 HOTorNOT.com .................................................................................................................................................. 54 iStockphoto.com .................................................................................................................................................. 59 Jumpcut.com ........................................................................................................................................................ 63 Jumpstart Automotive........................................................................................................................................... 67 Linkshare.com ...................................................................................................................................................... 70 LoopNet.com ....................................................................................................................................................... 72 LowerMyBills.com............................................................................................................................................... 76 Marchex.com ....................................................................................................................................................... 79 MyBlogLog.com .................................................................................................................................................. 81 MySpace.com....................................................................................................................................................... 85 Newegg ................................................................................................................................................................ 90 Rent.com .............................................................................................................................................................. 95 Rotten Tomatoes.com ........................................................................................................................................... 98 Userplane.com ................................................................................................................................................... 101 Wallstrip.com ..................................................................................................................................................... 105 Xfire.com ........................................................................................................................................................... 108 Zappos.com ........................................................................................................................................................ 112 YouTube.com..................................................................................................................................................... 116 Alltopstartups.com 3 Introduction You probably have at least a dozen very good reasons why right now is not the right time to start a company. But in another light, it's almost a sure bet that right now is the best possible time for you to go ahead and take the leap. In Paul Graham‟s own words “You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as people.” The founders and employees of the companies in this case study share their success stories of how they launched their businesses, strategies adopted to launch the companies, exit strategies and food for thought. Perseverance is important because, in a startup, nothing goes according to plan. Founders live day to day with a sense of uncertainty, isolation, and sometimes lack of progress. Successful startup founders typically get rich from the process if they provide solutions to problems that need attention the most. Thanks to Web technology, anyone can start a business from anywhere at any time. Collaborate with thousands of other people all over the globe, get instantaneous feedback on new business ideas, and spread your marketing message around the world. With the right support a simple idea could be nurtured to become a multi-billion business. Alltopstartups aims to cover top startups that are winning awards at various startup competitions and all startups and will provide you with the news, features and advice that will help guide you as you strike out on your own. Thomas Oppong -Founding Editor, Alltopstartups.com Alltopstartups.com 4 Facebook.com written by Nisan Gabbay, Facebook was launched in February 2004 by Harvard undergrad students as an alternative to the traditional student directory. Its popularity quickly spread to other colleges in the US by word of mouth, and the site now registers close to 15M monthly UVs and over 6B page views per month. Facebook has completed two rounds of venture financing at very high valuations, the first at a valuation of ~$100M and the second at ~$550M (valuations are unconfirmed). These valuations were driven by the multiple acquisition offers that Facebook has reportedly turned down (the latest was a rumored $750M offer). Facebook is already generating significant revenue, so despite all the valuation and web traffic metric hype, it has also established a very real business. Interviews conducted: Noah Kagan, early product manager for Facebook. Noah will soon release an e-book on Facebook, with good insight on the social networking space. You will be able to download the book at Noah‟s blog, okdork.com. I have had plenty of informal conversations with people close to Facebook over the last two years, while not formal interviews, I would regard these as quality sources – employees, investors, and competitors. I would also like to thank Nick Macey, a student at the University of Utah for helping in the research and writing of this case study, and providing the ever valuable user perspective as a current college student. Nick will be helping with some of the writing on Startup Review in the future. Key success factors Provide pre-existing offline community with a complementary online service Facebook had its initial success with college students by providing an information service that was not available offline – an interactive student directory containing each student‟s class schedule and social network. Before Facebook added the feature sets it has today, it was simply a more complete student directory. Facebook did not create a community where one never existed before; rather they provided an important information and communication service to a pre- existing offline community. While students already had a loose affiliation with all fellow students at a college, they didn‟t have an easy way to learn more about their fellow students outside their direct social network. Given the large class sizes at most universities today, students don‟t have the opportunity to interact with very many of their fellow classmates during class. I remember the days I spent at
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