Meebo and the Coming Battle For the Software Long Tail
I’m extremely disappointed at the lack of vision (or maybe just imagination?) here in the valley. Meebo just raised ~$3.5M at a pre-money of ~$10M from Sequoia and all we get is a collective moan and groan from the blogosphere on what the hell Roelof Botha was thinking. Isnt it kinda obvious? Its all about the long tail of software . . . first coined by Joe Krause. (BTW here is my old post on that topic).
Once Sandy from meebo announced the funding (BTW, Sandy looks familiar, I think I went to high school with her), both Om Malik, Paul K, and their readers (read the comments at TechCrunch too) wondered aloud why a thin client IM aggregator deserves to get funded by Sequoia of all firms. I suspect the key metric that got the partners over there excited wasnt their incredible week over week user growth but the average duration of the visits. Because IM is the stickiest of all apps, Meebo has essentially created a persistent connection/relationship with their users . . . the first requirement for becoming the third “desktop” . . . (windows and the browser were the 1st and 2nd).
Because the economics of the long-tail distribution, the real money to be made is not in serving the individual niches underneath the tail (by definition small in area) but in the aggregation of the entire long-tail (by definition disproportionately larger than the head). The problem with creating “platforms” capable of aggregating the tail is that without some applications ontop, the platform is useless and unable to create network/platform effects. So Meebo (and others) have all built trojan horse applications on top of their platform in order to attract critical mass of users which can in turn be monetized through the platform by selling “access” to independent developers. As a result, all the complaints about Meebo and the unsustainability of thin client IM as a business is really stupid. They could care less if their IM app makes them any money, its only for traffic building. Why do you think Meebo needs to raise money? Why do you think Sandy said they will not be pushing ads for now? They need to invest in the infrastructure and continue to grow. . . they are not even close to the harvesting phase of their venture life cycle.
What is special about Meebo is that unlike other players (Mashable has a good list of Ajax desktops and Ajax Office Apps), they have picked the right application (IM) as the trojan horse (persistent, realtime, social, sticky, high switching cost, high ubiquity, portable, variable access points, and highly controversial in the enterprise thus encouraging new access points). Goowy spent all this time building a platform using e-mail as the trojan horse but didnt realize IM is a better app for that purpose. Other Ajax office players spent too much time building applications rather than the platform and will eventually have to pay Meebo (or whoever wins) to have access to its user base.
Of course the platform itself really includes two components: backend and frontend. On the backend its pretty uniform in implementation (from the feature standpoint), its API (like konfabulator), payment metering/processing, and some sort of directory/marketplace that helps users discover new apps.
The front end is much much harder to define. The so called “ajax desktop” implementation that Meebo is trying to do is only one methodology. The portal players (Yahoo, MSN) can and is playing in this space aggressively without a virtual desktop (for now, though start.com is here). (BTW, Yahoo is probably the only website I keep up persistently on my browser). The Wiki approach by JotSpot and SocialText is another. Lastly, salesforce.com is also aiming for this space through the enterprise application (again another persistent web-app/page/site for the enterprise worker).
Thus Meebo might have a leg up on the desktop players, the battle for the dominance of the software long-tail is far from over because competition could come from all directions. Due to time/space constraints, I highly doubt there will be more than one winners in this space (if at all, it could remain forever fragmented). We already have the OS, the browser, and for some Outlook “up” permanently on our desktop . . . one more seems reasonable if it could aggregate all messaging needs but two or three more will for sure cause carpal tunnel syndrome from all the Alt-Tab I have to do.