I found a Boston Globe newspaper article from Jan 17, 2005 titled, “In the Shadow of Google,” which discussed three Boston area firms offering specialized search technology. They were EasyAsk, Dotomi, and Eliyon. Looking at these companies today vs 2005, did their niche strategies make sense?
According to the 2005 Globe article, EasyAsk’s natural language technology helped buyers find desired products on e-commerce sites, but “Now the Marlborough company, backed by Sigma Partners of Boston and Flagship Ventures of Cambridge, is branching into the field of enterprise search – helping employees to locate corporate data.”
“It’s not hard to understand EasyAsk’s motive for diversification. While Alperin [president of EasyAsk] estimates the market for e-commerce search software less than $100 million a year, Alperin thinks the market for enterprise search tools is closer to $1 billion annually, and growing.”
Fast forward six years: EasyAsk was acquired by Progress Software in 2005 and sold to entrepreneur Craig Bassin in May 2009. According to a 2/1/11 D&B credit report, the company had $8.1 million in revenue.
Dotomi, founded in 2003, “…Dotomi offers advertisers the ability to customize messages to consumers on banner spaces of the various websites they visit, from about.com to newtimes.com.” (2005 Boston Globe article) Dotomi was sold to digital media company ValueClick for $295 million in December 2011, still emphasizing advertising to website visitors, but with a personalized approach in 2011 instead of the banner ad business of 2005.
Eliyon Technologies Corp
The Boston Globe reports that “Eliyon’s business search engine enables customers to develop detailed corporate and personal profiles that quickly yield information such as the names of everyone at Microsoft Corp. who works on the Xbox or all vice presidents for manufacturing in the Boston area.”
In March 2005, Eliyon changed its name to ZoomInfo while keeping the same focus on collecting data on business people. ZoomInfo is still in business with $16 million in revenue according to a 2/1/11 D&B credit report. Unlike the two other firms, the founder of ZoomInfo, Jonathan Stern, is still CEO of the company.
So did the niche strategies help these organizations be successful? Yes, definitely, if staying in business six years is a criteria. For technology companies, five years or more are long stretches. And Dotomi’s sales price of $295 million was a healthy figure for an eight year old company.
Stay Under the Radar
So staying under the radar of huge competitors makes sense. In this case, being a big fish in a small pond increases longevity although not necessarily big payoffs. However, Google’s direct competitors fared worse. Digital Equipment Corporation’s AltaVista, launched on Dec 15, 1995, quickly became one the most popular web sites in existence. But changes in strategy and ownership doomed the product and it was shut down in May 2011.
So if your organization has a dominant competitor, what is your strategy for survival—and success? Finding a small niche is an obvious and common strategy. This analysis could be repeated in multiple industries.