Morrie the Toupee Salesman

The other day, digg announced that they had joined the Dataportability project. There’s lots of skepticism out there about whether that organization will actually produce anything useful, with lots of smart people saying it’s unlikely. I disagree, and as a shareholder in a member organization, I applaud the possibility. Here’s why.

The latest round of Google-inspired VC bets that has come to be known as “Web 2.0″ is rapidly entering the shakeout phase. Funding is drying up, people are exhibiting “fatigue” with too many web sites, there’s just too many “social” sites out there to keep up on. Typically what happens in this phase is that the leaders start concentrating on building barriers to entry. Standards groups are a classic barrier to entry.

From the perspective of a one or two person startup building something in the “social” arena, republishing someone else’s data is often an easy way to find a niche. It’s not very respectable, but it’s often a great way to bootstrap. See friendfeed.com for a recent example.

Most big companies hate screen-scraping - there’s the immediate irritant of causing load on their server, but the real concern is always that it just feels like stealing. So companies supply APIs - with the excuse that they want to reduce the impact of screen scraping on their servers. But, invariably, these APIs are for “non-commercial” use only, and anyone who wants to use them commercially needs to contact the bizdev folks (people trained at extracting all your profit, basically).

Lots of little guys see the trap of APIs described above. You can build something, but if it ever gets successful enough to make money off of it, don’t expect to see any of that money. So they stick to screen-scraping. Which makes the big companies unhappy.

That’s when standards bodies like the Dataportability project appear. The goal is to create an additional level of value - an “official” non-partisan seal of approval that member companies can use to demonstrate that when they get data from another site they do it the approved way (including the bizdev shakedown). Essentially to shame people who don’t have the seal of approval into joining their organization.

And that’s when the barriers to entry kick in. Because joining isn’t going to be like the BBB, where you pay a small fee and stick a stamp of approval on your website. Nope, this is going to involve a long process where lots of intelligent people sit in stuffy rooms and argue forever about things that really aren’t important, but because it’s a standards body, have to be done right. Eventually the endless meetings will become full-fledged conferences, where many, many “stakeholders” get together to argue endlessly about stuff that isn’t important, but because it’s a standard body, have to be done right. And as this is all happening of course, the cost of membership has to go up. And up. And not just financial costs, you’re also going to have to commit significant technical and time resources to keep up with the process. And when you finally do get the standards you need to build features for your little one person website, guess what? They’ll be “interim” standards. You’ll suddenly realize that this is an ongoing process, and is going to suck up significant time for ever, without any guarantee of something useful coming out of it. Other than the barriers to entry, that is.

So as a digg shareholder I applaud the process. Having worked with Steve Williams, he seems like the ideal guy for the job - a walking, talking barrier to entry if ever there was one (I’m being complimentary, in case that’s not clear). The blog post includes a whole alphabet soup of standards just so we all get a taste for what’s to come.

As an entrepreneur, there’s always hope for the opposite - that the companies involved will underfund the thing and it will die a quick death. It doesn’t seem likely but you never know.