tech-company, business-model, b2bI have a financial B2B product that we are working to get product/market fit for. The product requires data from an outside source to work.
Is this a poor strategy for building a scalable company?
The data is available from more than one business source and then our service manipulates the data into something more meaningful.
This is the subject for some debate in many startup and investment circles.
One school of thought is that it is extremely risky, and that there are many examples of companies that have been decimated, ruined, when the “data-source” company decides to cut off access, change APIS, or start charging for the data access. There is a graveyard somewhere with tombstones of company names that have been inadvertently (or deliberately) killed off by facebook and twitter when they throttled data access, limited apis … or cut-off access because they released a competing product.
The other school of thought is that there is a huge business for those who use data aggregation and APIs from 3rd parties - and do it right. Usually this means adding lots of extra value to the consumer. This comes by consolidating data from many sources, summarizing, interpreting, customizing or creating tools that allow users to better use the raw data. Again, there are a plethora of companies who do very well in creating twitter tools (or overall social media tools) that rely on twitter/FB data streams and APIs.
I don’t see why it would be a bad business model
If the sources are reliable and you have proper permissions for data aggregation or their API’s, then you are good to go.
Is this a poor strategy for building a scalable company?
Unless and until you are manually aggregating data instead of some type of a syncing model, I don’t see why the model would not be scalable. If you are able to scale your tech. as you keep increasing the sources, then you would be good, and companies do(and should do) that on a regular basis, i.e. scaling up and scaling out.
This can be a fine business model to begin with. But vertical integration is an important asset to controlling your commodity, especially in data mining.
If your source is a large established one, just be wary of overlapping interests, where they might produce your secondary data sets and cut you out of the distribution channel.
Well, It’s not a bad business model in fact looking at the current trends it is the best way to get started. Since, new businesses require immediate & effective data to work on it is better to gain data through reliable sources instead of building your own data which is obviously a time taking procedure
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