$1.2 million for … this?

8 Aug
2007

In my previous post, I had said you are not a company. The issue was simple – if the business falls apart without you (ie single-employee situations), then that isn’t a company. It is more freelancing.

The same should apply to ‘companies’ that rely purely on widgets.

I read today on TechCrunch on how JS-Kit just secured $1.2 million. It boggled my mind when you look at their stats:

  • 1 CEO
  • 12 engineers (what in God’s name!)
  • 5,000 sites using their widgets
  • 1,000 adding each month (but no mention of how many stop using – unless 1000 is net)

First off – what does JS-Kit do that requires 12 employees? I’ve talked about Blog Flux scaling issues, and we were able to solve that with a rotating 1.5 man programming team. Back then we were doing 20 million Apache requests a day – that number is far higher.

But even more depressing is 5,000 users. That is absolutely horrible. Hell iBegin Weather has over two thousand sites using the widget and it was just launched on May 10 (< 3 months).

So really - 5,000 sites isn't impressive. 1,000 a month isn't impressive. 12 engineers begs the question - "wtf are they doing?"

At the end of the day, it is the entire business case that blows my mind. $40 a month. How many people do they honestly believe are going to pay $40 a month? Even with 1,000 paying customers, that means $40,000 in revenue. Is that suppoused to pay for 13 employees? And dropping ads into the widget? Sure you may make some money, but expect a lot of users to drop you like a hot potato - most serious professionals (which is who they want) would rather take the time to find a new widget/install a new widget than to have ads cropping up into a simple rating widget.

And this 5,000 is with TechCrunch having mentioned them before – imagine if they had gone TC-less.

5 Responses to $1.2 million for … this?

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Khris

August 8th, 2007 at 1:29 pm

Hello,

Thank you for your interest in discussing JS-Kit!

In my opinion, your post is incomplete.

Given that you have not spoken to JS-Kit you are unfamiliar with our product road map and long term revenue model. As such your cannot accurately conclude how many engineers we might need or how we will monetize our efforts over the long term.

On our adoption, you hold iBegin Weather as an example. Using your numbers they are growing at ~650 sites a month vs our 1,000. It would seem that we compare favorably.

Lastly, the real story here is that JS-Kit is empowering publishers with the features they need to compete against the “big box” sites. Our services are easy to use, work great, and are affordable. Keep an eye on us — there is a lot more to come!

Be Well,

Khris Loux, CEO
JS-Kit

khris at js-kit.com

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Ahmed

August 8th, 2007 at 1:38 pm

Khris – yes it is true I don’t know about your roadmap. But I read TC talking about advertising in widgets or charging per month – which is what I based my talk about the revenue.

It explicitly states this on your demo page: “JS-Kit’s Ratings service is completely free and does not contain advertising.” – the move to advertising won’t be free.

iBegin Weather is getting 650ish sites a month after < 3 months, and without any mention on sites like TechCrunch. And at the same time, it is *not* a money maker. It doesn’t make any money, and it was never intended to make any money. Inserting advertising into our widget would kill its popularity overnight. Trying to charge for it? Never going to happen.

Yes JS-Kit is empowering publishers, as is Blog Flux and iBegin. But we don’t have 12 engineers nor $1.2 million to do that (and survive) :)

Avatar

idontgetit

August 15th, 2007 at 2:16 am

This shouldn’t be that complicated to understand. KickApps and Ning have received significant financing to enable web 2.0 features on 3rd party websites. Ning recently raised some $40M dollars to power social networks. In the case of this company, clearly they’re targeting more basic features but some which are still central to the web 2.0 phenomenon such as ratings.

Given that family tree websites have gone out for $100M pre-money and an ice cream vending machine co. commanded a $75M valuation, this is nothing to get too worked up about.

Avatar

Ahmed

August 16th, 2007 at 9:34 am

@idontgetit – funding something silly isn’t about relativism – it is about objectivity. Doesn’t matter if Ning or KickApps are ridiculous ideas, it doesn’t make JS-kit and more (or less) questionable.

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Konrad Roeder

August 23rd, 2007 at 10:06 am

A CEO and 12 engineers. That’s a real healthy burn rate.

How big is the widget market? I’ve seen hundreds of companies that are in the widget business. Certainly myspace is supported by thousands of widget and blingie companies. Unlike music that wears out due to people’s tastes, once a widget is made and works well, it’s pretty much around for a while, just change the skin to make it look new. As Yahoo and John Aquino have already figure out, some widgets are more popular than others. To have a unique web page, you need new ones. But they are becoming more and more risky to invent due to the law of diminishing returns. The risk is in developing the widgets. If they don’t sell, there is no return. I would let moonlighters make the widgets.

However, the aggregator has a good variety can gain repeat web designers use them. It would seem to me that the money would be in aggregating widgets in a widget store and not in creating them. Yahoo has bought that spot with big bucks. I would think the power of the long tail lies in having the largest collection of reliable, bug-free, versatile and inexpensive to operate widgets. The bigger the collection, the bigger the overall revenue stream. It really does not cost a lot of money for a server farm of widgets.

Now back to the number of employees question. Why does wikipedia and craigslist have only twice as many employees as you do? Maybe the way to compete against Yahoo is with a self-service widget store with ranking and test results, user feedback…

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