Battle Between Book Startups Shelfari & LibraryThing
Shelfari is a book sharing startup with a gorgeous look-and-feel, innovative features and it was acquired today by Amazon who was also an early investor in the company.
LibraryThing is a similar book community that lacks the design and deep social features of Shelfari, caters to an older audience, and also has Amazon as an investor. They vehemently despise Shelfari and like to let everyone know it. From a post by LibraryThing responding to the Shelfari acquisition:
I have respect for LibraryThing’s 40+ competitors, but withhold it for Shelfari. They were rather famously called out by me and by others in a series of blog posts exposing a program of spamming and of “astroturfing” (paid employees posing as excited users in blog comments). The apologized on both occasions, but I have, quite frankly, the greatest contempt for them, and for what book-based social networking will become if they beat out LibraryThing.
Ouch.
I don’t really care what Shelfari has done in the past but publishing this type of entry right as Shelfari gets acquired absolutely sounds like sour grapes. Shelfari is newer, prettier, flashier, and caters to a younger audience, whereas LibraryThing does the opposite, and look who got acquired. Design matters. Features matter. Making your site look like it was produced in the 21st century matters.
Shelfari was acquired because of its innovative user interface and that is one of the things that LibraryThing absolutely does not have going for it. LibraryThing is plain looking and you just can’t avoid that. LibraryThing catalogs more books, has more features, and lets users control data more accurately, but it doesn’t have the pizzazz that Shelfari has, and in the end that’s what ended up mattering to Amazon.
What can someone learn from this?
If you have a competitive advantage but it’s buried in the details, then you might as well not have an advantage at all.
Shelfari’s competitive advantage was plain as day (quality design and polish) and that’s what Amazon wanted, so they bought ‘em. I’d say “better luck next time” to LibraryThing but who knows if there really is a “next time” since Amazon already made its move.
Tyme White # —
Actually one could say it is the lack of details that caused the outcome that occurred. Josh (Shelfari) is very detailed and business minded. Shelfari is a very corporate company and that makes a good fit. LibraryThing is the exact opposite as their focus is on openness and that is their strength. Shelfari also has a very close relationship with Amazon which almost guaranteed a buyout:
Actually, this type of situation is like the problems business school students face. If you were LibraryThing what would you do? Their lack of attention to detail and long-term goals is what put them in this very screwed up position. Not only does Amazon own a 40% stake in LT they also are dependent on Amazon for their library data - which is a closed license deal (in direct conflict with what they state is a primary goal - openness). How many companies would like to invest in LT when Amazon owns 40% of it? While LT moved in a direction that caused conflict Shelfari moved in a direction that bonded with their investor.The business decisions made directly impacted the success of both companies.
Perhaps a better way for me to describe it: focusing on the right details and not getting caught up in the wrong thing(s) is a move in the right direction for success.
Mike Rundle # —
I honestly don’t know what route LT should take after seeing their main competitor get bought-out. Like you said Tyme it wasn’t just the design of Shelfari that got them attention, it was their attention to detail and the exacting business plans that they executed. What could LT possibly do to shine when the spotlight is on someone else?
Tyme White # —
They are talking about going open source which is one option I suppose. Their attractiveness to buy has been diminished with Amazon owning 40%. I’m not sure what the dollar value of 40% is or what Amazon intends to do with their share but my goal would be, instead of criticizing the buyout, developing a relationship with Amazon to see what their future plans are.
I cannot imagine what it is like to start something from the ground up and one day realize that my competitor owns 40% of it.
Tim # —
The design you like is pretty. But their “success” lies only in getting bought. With a multiple of our initial funding, they continue to get less traffic—even although they’re free and LibraryThing is a *paid* service! Maybe readers aren’t as impressed by graphics as you think they are.
Let me suggest an alternative purchasing scenario. Shelfari had no sensible business model—ads and affiliate revenue weren’t working. They was funded by Amazon, probably with some mechanism to pick up the rest. When they ran through the million they got from Amazon–they were known to be looking for a second round–they were saved from bankruptcy by being bought cheaply.
LibraryThing was funded with a fraction of Shelfari’s $1M. Yet we are profitable, with accelerating revenues from the library market, something Shelfari ignored completely and which Amazon will have a hard time wooing.
It’s notable that every single “startup blog” have ignored LibraryThing’s library-market business completely, presumably because they never heard of it. Nobody has even tried to do the math on it, although we’re currently in more than 60 catalogs around the country, including the largest one there is. Although libraries spend hundreds of millions on technology every year, and studies show that—in aggregate—they have the web hits of Amazon itself, they are very un-cool.
Now I don’t suppose it matters how much money Shelfari loses. They’ll push that wet noodle as far as they want. But the history of big-company purchases is not always a happy one.
Interesting times.
PS: As regards data, LibraryThing is the only major service that uses something *other* than Amazon data—linking to some 685 libraries around the world.
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