The Case Study

You are the lead developer of a small but promising web 2.0 startup. As the young, intelligent engineer with a specific plan for the mechanics of a new web site, you find that interest is flowing in from many of your colleagues in the technology world.

As a key partner in the project, you pick an established but young web 2.0 figure who is a key executive at a social bookmarking site as well as at a tech podcast company. Highly popular among the tech fans on his site and well-known in the industry, your business partner may be the closest thing these days to a “rock star” of web 2.0. Skeptics might say that he is not yet particularly well known outside the Silicon Valley–but then the same can be said for Twitter, Ajax, even for the term ‘web 2.0’. You surmise that his track record of previous success and ability to gain over a million users for his still-growing social bookmarking site ensure that he will offer sound judgment in running and promoting your business as well.

Since your goal involves launching a site with a code base that you have developed as a side project, you decide to move the product as fast as possible to an open beta–and then have an invitation only version launch that limits the number of new users that can join. Your marketing is based on your contacts in the tech industry and the buzz you have been able to create on the web, especially on tech blogs which happen to be obsessed with micro-blogs, social bookmarking, tumbelogs and short messaging services. Your site has elements of all of these, has a modern, Ajax-intensive design and uses a certain kind of Python framework.

After a round of frequently positive reviews for your site, your invite system soon goes to work and people start joining in large numbers. Although you face many competitive threats from similar sites which also allow users to exchange short messages, you offer the unique value-added feature of file sharing. Many of tech’s coolest people join in.

Rushing to the market has gotten your site has established, and now you are racing to add features. For now your pro accounts promise only to take away ads and increase your file upload size; some consumers are expecting more from a “pro” account. You just added the XFN standard for the social graph, and there’s no reason that your site won’t become an important part of it. For now, you lack an open API like many competitors but are working on it.

In the mean time, your “rock star” executive has been working on stuff, too–at his other sites. Browsing the new features on his “social bookmarking” site, the project with a million users that he had previously been involved with and was now splitting his time with, you notice that they have now blatantly stolen one of the key design elements of your site. When people sign up, they now see an incredibly similar form for a certain question that users on your site also see at your sign-up page. As a user and even previously a vociferous fan of this social bookmarking site, you know this feature that copied yours has just been added. What do you do?

Background

Well, in the case of Leah Culver and Pownce, here’s the story:

‘Pownce co-founder Leah Culver has made a post to Digg suggesting that she feels the new social networking features that the site added last week were copied from Pownce. In the posting, which links to a now deleted Flickr photo, Culver writes:

“Since I originally came up with the Pownce gender list, I’m somewhat miffed that Digg copied Pownce.”’

My first thought on this–maybe she’s trying to make a point exactly the way she did, or maybe she will decide to handle disputes at a different level. Either way, I hope it works out well for her and Pownce–I think it’s a good platform, what it needs is more users and more file sharing methods in my opinion, but at any rate I despaired of using Digg a few months ago whereas I use Pownce every week.

Pownce’s strengths:

–new features

–popular entrepreneurs backing it

–tech-savvy user base

Pownce’s weaknesses:

–no public API (for user-built apps)

–limited user base

–no widgets for use on other pages

Pownce’s Opportunities

–Build “best-in-class” reputation for file sharing with web 2.0 set the way Flickr has with photos–then get people to buy pro accounts

–Match advertisers with tech-savvy user base

–Add features one at a time to build lightweight but useful social networking product

Pownce’s Threats

–Close competitors: Twitter, Jaiku, Facebook, Gmail

–Eventual bubble burst in web 2.0 inevitable

–Kevin Rose’s other sites stealing trade secrets from the inside