Startup general interest

The internet sector is maturing, two more signs

By July 13, 2010 2 Comments

A couple of weeks back I blogged that the increasing importance to startups of partnerships with companies like Facebook are making the internet more and more like traditional areas of tech like software and semiconductors and is a sign of the maturing of the internet sector.  This morning I have been struck by a similar thought this morning reading two articles in the FT.

The first was a report on Domino’s Pizza UK’s first half results – Domino’s is a traditional offline business that was in existence long before the web rose to prominence and they now take fully 33% of their orders over the internet.  Moreover they cite an increase in internet orders as one of two reasons their first half results came in ahead of expectations (the other reason was a boost from the World Cup).

The second was a feature on Google, search engine optimisation, and search engine marketing (SEO and SEM).  The main point of the piece is to say that traditional businesses now understand the benefits of SEO/SEM and devote significant resources to making sure their sites and products feature prominently in search results, potentially crowding out smaller companies with less to invest.  Large companies with a good page rank are also at an advantage when they move into new areas because their page rank will help the new properties do well even though they have different content and may not be as ‘good’.

Thinking about this a little more, good SEO/SEM has moved from being enough to create success for a startup to become one of the things that every business should do well, but won’t generate success on its own.  I saw evidence of this trend yesterday when I attended a board meeting at a company in which we are thinking of investing – by listening to the directors debate the business for three hours I got a very good sense of which areas they are focused on as likely to make the difference for them going forward, and what I learned was that despite the fact that they have a very innovative and effective approach to SEM it is other areas of marketing and avenues of customer acquisition where they hope to stand out and beat the competition.

In summary, I think this tells us that large companies have now pretty much fully woken up to the impact of Google, search and ecommerce on their businesses and that the white space for startups is increasingly concentrated in product areas which don’t have a direct offline equivalent and/or which can drive customer acquisition via social media or other non-Google channels.