There has definitely been some web success stories out of the recent crop of web companies that have sprung up in the last couple of years, no doubt about it.
However, without necessarily calling the current state of the new web a “bubble”, I’ll just say that I think there are a lot of companies that are going to fail or struggle for years to really make things work.
Dogster is one of the most recent success stories, but not because they’ve received $1 million in funding from a notable group of angel tech investors, in fact that’s almost a negative in my mind.
Dogster is a success because:
1. They’ve managed to build a business without funding to this point. Dogster managed to start over two years ago without funding and grow a big site without it. The way some people talk these days, you’d think that was impossible.
2. They have scratched and clawed their way to profitability. Dogster is now making six figures a month in revenue and will hit over 1 million in revenue for the year, an amount that they say makes them profitable even with their staff of 10 employees.
3. They moved beyond Google Adsense. Sure, there are plenty of Adsense ads on Dogster’s site, but they are selling a lot of premium advertising, building sponsorship deals for targeted advertisers, and building in other paid services.
4. They made a site for a mainstream audience. Too many new web applications are aimed at the early tech adopters who read Digg, Techcrunch, and are power users of the web. There are only so many of these users, they only have so much time, and they don’t like clicking on ads. That’s a bad combination if your business plan depends on it.
How will Dogster do in the long term? That’s less clear to me. The pet ownership market is obviously huge, and they can expand into other sites. I wonder a bit about the novelty of it wearing off, but I know that many users use the site as their own outlet of talking through their pets. As weird as that sounds, it’s a weird world out there.
Without knowing the details of the Dogster operations I can’t really comment on whether taking the recent investment was a good idea or not, but Dogster’s success was working hard and staying lean, and any time outside money gets involved that worries me. Especially when you see job postings for a marketing director. I’m kidding, sort of.