A new player in the business networking game, HowGood is all about rating and review. Founder John Wall says that HowGood is “Facebook for professionals”. I’m assuming of course that he doesn’t mean that it’s a mindless place where you can play scrabble and “poke” people.
The idea is a customer rated directory system for service providers in various industries. Its aim is to replace, or augment, the personal referral service that occurs in the physical world. According to the founder, the service has about 700 members, and it attracts around 200 visitors a day. His aim is for 15,000 visitors a month by the end of the year.
And therein lies the problem – 15000 visitors, even in one discrete geographical area, is nowhere near sufficient to build the sort of momentum necessary for this sort of service. The reason traditional directories work is two fold;
- Businesses know that customers generally use the directory and hence are keen to be included
- Customers know that most businesses are included and therefore use the service knowing that it will work
It’s a perfect, self-perpetuating feedback loop. The one area that traditional directories fall down however is in qualitative differentiation. I may need a plumber for example, and know that the Yellow Pages will give me the best choice of plumbers, but how do I find out who is a good plumber? HowGood attempts to solve this but the prognosis isn’t good.
Traditional directory services have a difficult path to tread here – too much qualitative differentiation and they risk marginalising a significant proportion of their listers. They’re making great revenue so there is no real incentive to change their focus. New start-ups have a significant hurdle to leap in terms of gaining significant listers to achieve traffic (and the corollary – gaining sufficient traffic to achieve more listings).
So what is the answer to this conundrum? Firstly don’t try and start from scratch – HowGood is destined to fail in my opinion because it is attempting to both start from zero, and subvert the current business model. The winning plays in terms of qualitatively differentiated directory services will likely come from one of two avenues;
- established business networking services wanting to broaden their offering (and eat some of the traditional directory service’s lunch)
- second level established directory services wanting to add on the killer app in order to overtake the number one player
So who will win?
Can I just point out this page on the site: http://www.howgood.co.nz/welcome/about
I’ve complained before about start-ups not displaying info about the people behind them, and this page shows them all how it’s done. Simple.
If you have to pay to market this type of model – it’s unsustainable. It HAS to grow organically and with momentum from the members. That’s the way it should grow anyway as if you don’t have internal momentum you’re flogging a dead horse.
They mention a goal of moving from 200 visitors a day (6,000p/m) to 15,000p/m (500p/day) by end of year. In the market this is hitting, the growth rate HAS to be much faster than that to be a remotely sustainable model. Also, I’m not sure about the path to revenue they’re aiming for?
I think they look like great guys, but visitor numbers don’t equal a sustainable business. Cash/profit in bank does. Can someone shed some light on the revenue model?
Don’t know about revenue model but I suspect they are funded for slow, organic growth.
Perhaps an answer to the scalability/critical mass issue is focusing on a tightly targeted niche – eg just real estate agents.
Well thank you very much for your comments. We appreciate and welcome debate about our site. We have a number of ideas around a revenue model which we have borrowed from other sites. The good news for HowGood is it is very well funded and we are in no desperate hurry to generate revenue from the site. The site will only work if our members derive value. Julian – I agree we need more visitors but if we can get 15,000 a month by the end of December it will encourage us that the site is growing nicely organically – of course its not enough, but it is critical we set realistic expectations that we can meet.
I would value any other feedback or ideas you have.
Thanks again for noticing us.
John Wall – Founder of Howgood.com and MD of Sugar International