One of the strategic angles we may want to look at in this course is how to tap into the flow an existing group of users to meet needs that are not currently being met by, say, popular Web 2.0 sites. Not all Internet startups need to be stand-alone applications. In fact, to the degree that you can piggyback on the success of current applications, to that degree you gain leverage for powerful marketing and/or the opportunity to be acquired at a later date. We can point to dozens of successful endeavors that have taken this path.

So with respect to ebay, like PayPal and Skype before us, we’ve got to ask “Are there tools or functions that would be really helpful to users that are not currently being met by ebay or its associated applications?”

That may be a great starting point for identifying entrepreneurial opportunity.

Maybe we’d call it “Symbiotic Entrepreneurship.”

Create an application that benefits both users and the owners of the application itself, and you might just position yourself for a nice acquisition.

Article written by a friend about a friend

Double take – The politics of Facebook

As we examine the auctioneer monster that is Ebay, it’s important to consider what else the company is doing to stay competitive in the marketplace.  As Google has set the standard by acquiring literally hundreds of internet startups, Ebay has followed suit and made some allies of their own.  Consider Paypal, Skype and most recently Fraud Sciences a company acquired just yesterday.

PayPal To Pay $169M For Fraud Sciences

PayPal will pay $169M in cash to acquire Fraud Sciences, an Israeli company that develops online risk and security tools.

PayPal, a unit of eBay (NSDQ: EBAY), will use Fraud Sciences’ technology to enhance the fraud management systems of both PayPal and eBay.

FraudScience has raised $7M from BRM Capital (which holds a 40% stake), angel investor Guy Gamzu, and Redpoint Ventures.

Founded by former Israeli intelligence experts, Fraud sciences set itself up to sort out legitimate bidders from suspicious bidders. The company was founded in 2001 but didn’t launch until the end of 2006.

By expanding their offerings, Ebay remains a forward looking company with growth potential.  Often times these strategic acquisitions occur not only to expand one’s own market but to stop the competitor from expanding theirs.  For instance, when Microsoft acquired just under a 2% stake in Facebook they did it with a strategic objective.  When Intuit bought billpay systems, they did it to block Microsoft from the market.  Ebay continues to be a power player in the market.

There is a whole list of reasons why people shop on Ebay. You get great customer service and some of the best bargains you can find online. Ebay is quick, easy and convenient and you can get exactly what you are looking for. In a few clicks it is all being delivered to your door.

I would like to argue that while all of these attributes help, none of them are truly what makes Ebay successful. Ebay thrives off of the inherent thrill of auctions. Ebay has become more than simply a venue to buy goods. Ebay in a way is becoming a form of entrainment. Honestly I can fully understand this outlook on the system. Until last week I had never used Ebay before and didn’t understand the phenomena, but now I definitely get it. I decided to post my personal Ebay experience here to illustrate what I mean:

Last week I opened my first Ebay account set up a pay pal account and was ready to do some shopping. Specifically I was looking to buy tickets to see the Lion King in Pittsburgh for my girlfriend’s birthday. At first I thought that I would be able to find an amazing deal that would definitely make using Ebay worth it. After some searching I managed to find two tickets for a very reasonable price and the bidding began. The auction had 2 days left to go until a sale. After being outbid several times at low amounts I decided to wait until the final minutes of the auction to do my serious bidding.

Finally after two days of waiting I sat in front of my laptop with a few of my housing group mates who had become interested with my bidding war. As the price of the tickets sky rocketed and the lead changed as different bidders increased and were matched on their maximum bids, my friends began pressuring me to raise the bar. While I really wanted the tickets, at that point I was bidding also to simply win the auction. With only a few minutes left, as dorky as it sounds, the experience became intense for me. My friends (who mainly just wanted to see me spend a lot of money) were pushing me on saying things like “are you going to take that from him?” when I was outbid and “Kyle if you win this auction it will be the most badass thing you have ever done.” Eventually I was outbid and the auction ended.

While I lost, I enjoyed the experience, I associated a good time with Ebay even when I didn’t win and I feel that is really what makes Ebay attractive. Ebay turns purchasing into a game and people go for that, Americans especially.

US News has more about the Ebay thrill here:

This is unrelated to my post but while doing some research on Ebay I found this funny YouTube video about it http://www.youtube.com/watch?v=HYokLWfqbaU

And we do mean everything. Or at least Australian philosophy student Nicael Holt did when he put his entire life up for sale on eBay early in January of 2007.

That’s right, in an entry titled “New Life for Sale” Holt stated that his name, phone number, all worldly possessions, social life, and training in his “skills” were going to the highest bidder.

In fact, the only things Holt specifically listed as not included in his life package were his passport, driver’s license, academic qualifications, legal identity and the future rights to his inheritance. Holt also promised he would transfer debt to the buyer, but said that he would throw in $20 and a sixpack of beer.

Among Holt’s worldly possessions were listed a surfboard, skateboard, a lamp “which your ex-girlfriend bought you,” childhood photographs, 300 CDs, a backpack, his clothes and bed, several piercings “to the value of $180,” and one bicycle described as having “wonky handlebars.”

Holt also offered a four week training course that would cover his personal history, tastes in fashion and food, “style of seduction,” interests, general lifestyle and six jokes. He would also instruct the buyer in the performance of his “skills” which included surfing, skateboarding, “fire twirling,” and a handstand. Additionally, the buyer would have “access to a cruisy job delivering fruit.”

Hot’s social life was also included as part of the deal. The buyer would be introduced to Holt’s circle of “15 close friends and 170 other friends,” and also to several potential significant others, which he counted at “around eight which I have been flirting with.” Holt claimed his friends would treat the buyer exactly as the treated him, which included “take me running, surfing, climbing and cook for me.” He did warn however that he had “2 nemeses.”

The bid on Nicael Holt’s life closed on the 24th of January, 2007 at AUD$7,500 (about USD$6,661.) I’ve yet to find any information about how serious the buyer was and if he or she (known to me only as “ridder-strade”) has actually assumed Holt’s life, friends, skills and possessions. It has also been reported that Holt had been talking to ABC about a documentary on the event. Again, I have found no information on whether this documentary was or ever will be made. I’ll certainly try to keep you posted if you I come across more information.

Sources:

Check out the original news story Here and Here.