Saturday, September 23

Zookoda for sale, business as usual

A few Techcrunch readers may have been unduly harsh about why the founders of Zookoda have decided to sell their business. Critics should stop for a moment to consider whether they're really asking too much to sign up for free to a web startup and have that service continue unchanged and without growing pains. You want every email responded to in <24hrs and  no service interruptions? Pay IBM a lot of money for something bespoke, don't sign up with a free web startup!

Why are the Zookoda guys selling? Well, no experienced startup founder starts a new business with the expectation that they'll continue to operate the business 'for the term of their natural life'. Even offline businesses (you know, 'real' businesses, like restaurants, law firms, real estate agents) get bought and sold. Web startups aren't the only companies to get built and sold in a few months either - many software and technology businesses are bought and sold even quicker - subscribe to a genomics or mobile software news RSS feed for a week. In my own experience, I've founded and sold one business in 11 months, and even bought one business and then sold it back to the founders in a year, at a profit. Neither of them were web startups.

I'm no business coach, but I've done startups, and I think any startup founder should always have three options in their mind at all times in order to maximise the value of their investment of time and intellectual capital:

  1. Should I acquire another business?
  2. Should I restructure my business?
  3. Should I sell my business?
If you're not asking yourself those three questions every time you run through your strategy, you're not doing the right thing by your shareholders.

There are plenty of reasons to try and sell a successful business, including changes in personal circumstances, relationship issues between founders, and a lot of sound business practice - your startup may get a turbo boost by being added to a set of products onsold by the purchaser's sales team, or plugged into a suite of products that already sells well, or taken to the next level by the purchaser's experienced development teams. Reading between the lines, I think the Zookoda founders are hoping to find someone who can turbo-boost the business by plugging them into a small business sales team, a broader small business software suite, or a successful advertising sales network.

Choosing to sell at auction isn't always a sign of a fire sale, either. Economists will tell you that auctions are the best way to efficiently value an asset, and auctions are used to reach a broader range of buyers than can be found through your own business network. It makes sense that a few guys working as hard as they can to keep a service growing might not have the broadest network of contacts to find potential buyers for a fairly niche business.

Like any startup, Zookoda's had growing pains, and anybody who's experienced some of the customer service issues mentioned by Techcrunch readers should stop and consider how you'd fare if you were part of a tiny startup team trying to provide responsive service and support 24x7 worldwide for a business that's gone from zero to thousands of customers since it launched in March. Alexa ranks them in the top 1% of URLs worldwide and recently their pageview growth is way off the chart, very interesting if you compare it to a similar service like FeedBlitz.

I use Zookoda for my own blog email feeds and I've experienced problems, but with patience and communication they've been resolved, and it's never seemed to me that the guys at Zookoda were doing anything other than working very long hours trying to make the service better for me and other customers. I'd like to continue to use Zookoda once its in new hands, and I'd be prepared to pay a reasonable monthly subscription or include AdWords-style text ads in my feeds in order to do that.

I hope it pans out well for Zookoda and I'm grateful that I got to use such a cool service for so long, for free.

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