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16 Comments

Is it worth building a startup where you don't own the data?

Hi,

I'd like to hear your opinions. Is it worth building a startup where you don't own the data? Think of a site that uses data from let's say Spotify or any other one. You clearly don't own the data and you are always dependent upon their mood. They could literally block access the next day.

So you would put a lot of effort in building it and might lose it over night.

Would anybody have an example where someone built a successful site?

Or am I just too pessimistic?

  1. 4

    While there's some worry, there's nothing inherently wrong with it. I'll give you two examples, one good and one bad:

    [1] Twitter had notoriously bad search capabilities when they first launched. A company called Summize saw the opportunity and built a significantly better search engine. Twitter than acquired the company and quickly integrated its technology resulting in the robust search now found on the site.

    [2] It's easy to forget the iPhone didn't have copy and paste until many years after its launch. Similarly, Twitter didn't have the functionality to allow users to post their own pictures and videos with their tweets. A developer saw an opportunity and built TwitPic. The company was very successful and solved a big problem. However, rather than acquire the company, Twitter just built in its own functionality (finally) and TwitPic usage decreased dramatically until eventually going out of business (looks like they were also hit with some copyright infringement heat so tread carefully around what you name your company.)

    I would certainly try and imagine a company's road map to see where your product might fit in. If you're just building a feature more or less, make sure it's one that you can do better and with more resources or perhaps a blind spot for which you can threaten to pivot into a potential competitor. Otherwise, they might just feel throwing a developer at the same functionality is the much better and cheaper option rather than acquiring you (or worse, cutting off your API access.)

    1. 1

      Thanks for the insights, wasn't aware of this twitter search topic. Background of my question is that I have already built a tool using the Spotify API. When I decided to build it my first intention wasn't to make money with it.

      I'm in the final stages to go live with the beta version. Will post it here when ready. In a few words, it lets you browse and discover through the thousands of genres available on Spotify.

      I consider myself a heavy Spotify user (several hours a day) and I always come to the point where I don't know what to listen since you seem to get presented the same artists. So my site let's you break out of the genres you know and discover new ones.

      This is something Spotify can build without a doubt and I wonder why they actually don't do it or offer it. If you spend some time googling and reading on forums related to this topic you will find users that have the same problem. We'll see, maybe it's not of that big interest as I see but at least I have my personal use for it.

      Meanwhile I do have thoughts about how this can print some money but first I need the user's validation.

      1. 1

        I feel like of all the companies who make their firehoses available, Spotify is the one that plays the nicest since the content isn't proprietary to them like twitter's tweet. I've also seen Spotify's dev / design teams throw up these awesome landing pages / one off sites to allow their users cool visualizations and vanity metrics and discovery tools only to disable the site after a short run (e.g. Spotify Wrapped).

        All Spotify cares about is users being on the site longer, so if your app enables that, I would think it would be to their benefit to empower you. Look forward to seeing what you built! I think Spotify's Discovery tab is majorly lacking and I majorly miss Rdio who totally nailed the "Heavy Rotation" section perfectly (if you don't recall, it was an amalgamation of all the albums people you followed listened to ranked by weight.)

        1. 1

          Yes, working with the Spotify api is really some kind of pleasure. It's well documented and easy to understand. 'My year in Spotify' I think it was called. Nice feature, and a pity that this site just has a life span of some weeks. Many people like and it gives some interesting insights. For example, I wasn't aware of having spent 100.000 minutes on Spotify in 2019, which makes 4,5 hours a day.

          My site is very simple. It lets you uncover genre terms and use these terms to uncover others. Actually not a big deal.

        2. 1

          This comment was deleted 4 years ago.

    2. 1

      Twitter competes with developers within its own ecosystem, which is borderline unethical IMO.

      I think if you want to build a Twitter app using their API, make sure it's something that's not a core missing functionality, but something only advanced users will find useful.

      Preferably something that will add massive complexity to Twitter itself if they decide to copy you.

      1. 2

        Yeah, Twitter is probably the toughest app to build on top of. I was happy to see OP mentioned Spotify as I think they would be the least prickly. Twitter's early momentum was largely the result of the robust eco-system built around their API, but I feel at this point with the mass proliferation of bots and some bad actors, they've had to clamp down a lot. I still use Tweetbot as my twitter app and pretty ironic to me that all these years later it still feels simpler and better than their own iOS app.

  2. 3

    With a product of my own that relies deeply on third party api's , I feel this question.

    There's rarely a concrete Yes or No answer. All startups come with their own risks. We just have to answer some questions for ourselves:

    • is the risk balanced out by the potential reward?
    • is the amount of work required to build my idea such that it won't be catastrophic if I get cut off by the third party api?
    • does my product create enough value that, even if I get cut off by the third party api, I'll have built good will with my users and will still have a relationship with them?
    • does my product add value for the third party service?
    • does the third party service add enough value to my product that it balances out the risk?
    • how much do I believe the world needs this product?
    • do I have other ideas that I'm just as excited about that don't carry this particular risk?

    I think, at the end of the day, the last two questions are the most important. How comfortable are you with this particular risk? Given that all startups carry risk, it's more about deciding which risks you're comfortable with.

    There are plenty of successful businesses that rely on third party api's. API's exist because those companies believe it's to their benefit to expose them. If you stay within the rules, add value and don't appear to be there just to syphon away business, you've limited your risk exposure in that particular area. And you have a ready-made customer, which is an advantage.

    1. 2

      Definitely can copy that. Important questions to ask, thanks for that. I have already built it. My reason for building it was a mixture between personal use (got tired of getting the same music/artists over and over again on spotify and I love to explore new ones), playing around with the api and just learning something new.
      I think it would add value to Spotify and as far as I understand their terms of use, I stay within the rules. But it's not live yet (will post the beta version soon here to get some feedback) and I'll see if they cut it off or not.

      1. 1

        I would love to try it :-) I have the same complaint about Spotify!

  3. 2

    The question isn't can you build a successful business, but rather can you rely on that business long term. If you are exclusively dependent on other APIs for your business to function, then you are at their mercy. You can still build something successful, but it could be temporary.

    If I were you, I'd at least have a plan for how you can mitigate your dependence over time. Netflix is a good example; at first, they were purely a tech play, 100% relying on other networks' content. Now they are generating their own content to stay relevant and derisk their entire business.

    • Can you use multiple APIs?
    • Can you (legally) scrape data instead of using APIs?
    1. 1

      Right, definitely, good point. It's about longterm. You either can sell it to them or you can build another branch from there, getting and using your own data. Thanks for the hint!

  4. 2

    I think you're right to call out the risk and you should go into it eyes wide open. I have struggled with many times because I have a background in data engineering. A lot of my ideas fall in this category. These types of ideas also suffer from the fact that generally you have to collect and organize large amounts of data before you have a useful product.

    There are lots of successful businesses that rely almost exclusively on third party data though. Social media listening (sprinklr brandwatch etc. on the large corp side) or social media automation tools (buffer, meetedgar fall into this category) are entirely dependent on whims of third party APIs. There are risks but there are also benefits to attaching yourself to existing ecosystems. Pullpanda was dependent on github API and eventually got bought by github.

    Even with adversarial web scraping large cases have been won siding with data aggregators/collectors https://www.eff.org/deeplinks/2019/09/victory-ruling-hiq-v-linkedin-protects-scraping-public-data

    Not speaking from an area of experience here but I suspect this would be a factor in the valuation if you ever went to sell the businesses as a buyer would price in this risk. I still you could make fine businesses with this approach.

  5. 2

    Business like that exist and sometimes for at least a few years make money... Was one on
    Nathan Latka YouTube shows...

    I think this should be further divided to if the target company is co operative in both policy and technicalities like providing API free or paid or private contract.
    If they have a policy against like LinkedIn and they also actively go after such services treat it as fire.
    These are expensive ventures that need to repay handsomely and maybe treated as temporary (is any service not temporary in the right context?)

    Always think about how much extra value your generating. Like if you just create a new UI for Spotify that low, if you let people mod the UI it's more and you start having your own data about the modded UI and if you cross Spotify data with something else that could be even higher if there is something produced that's highly valuable

  6. 1

    I've just submitted a post asking for feedback for my site. Here's the link, would be interested in hearing your opinion.
    @ChiGuy
    @mizkirsten
    @dhruvg
    @hatkyinc
    @Mut1nyJD
    Thanks for taking the time!
    https://www.indiehackers.com/post/feedback-for-mvp-wanted-spotify-related-47a75f2a5e

  7. 1

    Depends on the nature of your startup but it does bring risks and certainly if you are going for investors they might be a bit jumpy unless you add core value so the company you depend on might purchase your company.

    On the other hand if the company you are dependent on is Apple Inc or closely associated to Apple Inc stay away. They have the tendency to screw you other big time.

    1. 1

      Understood, hehe, thanks. No worries, it's Spotify. Don't know if they are known to screw developers/indiehackers as well. At the moment, investors is the least I'm thinking of but needs to be considered, you are right, thanks for that.

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