So Michael Air looks over my shoulder when I’m looking at egoRank and asks a fairly obvious question, “But how are they going to make any money?”.
My stock response came out “Someone will buy them.”.
Then it hit me.
Its all about the API.
So my response was as follows…
“Its all about the API, if they have an API and people start using it and it gets well infused into the net, then its harder for someone to just replicate what they have done and start competing from scratch.”
It would make more sense to purchase them for the goodwill associated with the penetration of their API.
If you want to take on an existing Web2.0 application you need to provide something that is compelling enough that people desire to migrate and believe that their current service won’t be able to replicate any time soon
Ideally you also need to clone the API so that its painless to migrate (Lawyers, Guns and Money).
James McParlane's Blog 